A Chinese cryptocurrency research firm, Peckshield, says that nearly 147,000 BTC or $1.3 billion worth of suspicious transactions took place on crypto exchanges in the last two quarters of 2020 from high-risk addresses.
With the popularity of cryptocurrencies as a form of transaction, though it is supposed to be tamper-proof and fully verifiable, among dark web transactions, it is imperative to keep some checks and balances. This is done by research and surveillance firms that assign a risk level to specific transactions stemming from suspicious addresses and wallets.
Like the Interpol, some countries mark these bitcoin transaction addresses on their sanction list, as they originate in the darknet, or are used for criminal activities.
The report from the Chinese crypto analytics company said the top ten crypto exchanges that accepted funds from suspicious addresses include Huobi, Binance, Okex, Zb exchange, Gate.io, Bitmex, Luno, Huobtc, Bithumb, and Coinbase. Out of these, the top three trading platforms accounted for nearly 60 percent of the bitcoins traded in total. The analytics firm found that the movement of funds between alleged illicit addresses accounted for 13,927 transactions in total.
The report notes that it has monitored roughly $1.59 billion worth of digital assets. Peckshield is one of many blockchain surveillance companies reporting on these types of high-risk addresses.
The high-risk addresses included gambling addresses, scams, exchange thefts, and of course, darknet use. Binance, Huobi, Kraken and Luno figured in Peckshield’s leaders’ list for H1 2020.
Peckshield said that some exchanges forego Know Your Customer (KYC) rules and allow swaps and do not follow compliance norms. It also said that cryptocurrency tumblers make investigations more difficult.
CryptoCompare’s Exchange Benchmark, which ranks more than 165 global spot exchanges based on risk factors,. revealed that 38% of crypto exchanges interact with high-risk entities in 25% or more of their transactions. Two top-graded AA exchanges on CryptoCompare’s list did not interact with these high-risk entities, although some Top-Tier exchanges did some of their transactions.
Peckshield monitors data for BitUniverse by bolstering the firm’s Exchange Transparent Balance Rank (ETBR). The ETBR data from Bituniverse stems from on-chain exchange balances recorded by Etherscan and Peckshield.
An investigation by Bitocin on 20 blockchain surveillance firms found that some of the lower-ranked addresses flagged by law enforcement agencies when entered into Bitrank applications gave a low-risk score of 52 even though the exchanges were found to be involved in some famous bitcoin scams.
Hence, the red flags raised by some of these testing and ranking research firms have to be doubly verified, and even the high ranking ones need to doubly checked for their low-risk rankings.