What is "dirty" cryptocurrency and how is it "laundered"

"Dirty" crypto - what is it?

Cryptocurrency is neither dirty nor clean. We ourselves give it a certain status by putting special labels or markings. Since all transactions are recorded in the registry (blockchain), it is possible to specially mark cryptocurrency, giving it the status of good or bad, in the opinion, again, of a specific jurisdiction or user. A “bad” label signals that the crypto originated from some phishing address or darknet marketplace. Such a coin becomes toxic and then “infects” all the wallets through which it “travels”.

When and who started tracking dirty crypto

Satoshi Nakamoto and the first miners started tracking it, because the essence of cryptocurrency, specifically Bitcoin, is that all addresses and transactions are public. They are recorded in special registries and stored in all previous blocks, so tracking the crypto became possible.

Of course, there are anonymous cryptocurrencies that do not have open registries. But in most networks where all the most interesting things happen, including Bitcoin, Ethereum, TRON, Solana, TON and so on, activity can be tracked.

Law enforcement agencies showed special attention to monitoring decentralized networks after Bitcoin began to be used by scammers. The turning point came in 2014.

How are those who conduct operations with “dirty” crypto punished?

The verdict depends heavily on what exactly happened. If it is a criminal procedure, then the punishment is, of course, criminal. If the tracking occurs at a non-regulatory, law enforcement level, then you should expect the funds to be frozen, your money to be blocked. If the crime is serious, then the punishment will be associated with imprisonment.

Mostly, problems arise on decentralized platforms, or somewhere else, where as a result of the check it turns out that the crypto is already "dirty" or "marked". That's the whole problem.

How to Check if Crypto is Dirty

It is enough to check the wallet of the one who will send the coins. This is crypto hygiene. If we are talking about interaction with ordinary crypto by the most ordinary users, then you need to periodically check both your wallets and the wallets of your senders. But the point is that checking the address is of little use for business needs.

If we check a transaction or transfer, we get much more information and see the whole essence. That is, real AML (anti-money laundering) begins only when we check the transaction. Everything else, of course, does not make any sense.

You can find tools for checking the purity of cryptocurrency, for example, at Chainalysis, Elliptic and BitOK

What should I do if I have “dirty” crypto in my wallet and is it possible to “clean” it somehow?

If you have received dirty crypto directly or indirectly, then of course you can clean it. Not "launder" it, so as not to fall into a negative connotation, but clean it with the help of various special tools and DEX, but not mixers. Yes, I will specifically stipulate that mixers will be displayed as mixers in the future, and cleaning such crypto will give you practically nothing. But if you use decentralized tools, for example, swaps [exchange] and bridges ["bridges" for transferring coins between networks], then there is a chance that in the future the systems will not see "dirty" consequences.

Nevertheless, if the systems see the use of DEX, you may be asked questions about the origin of the crypto and transactions with it. Therefore, 100% protection tools have not been invented.

"Dirty" crypto still causes problems for users. Businesses should think about them first and foremost, and only secondarily users who should not suffer because of this.

Plutonex