How Do Criminals Use Bitcoins To Launder?


In the 21st century, developments have taken people’s daily routine to another comfort level. Today, people are able to live successfully with better living standards. The rise in technological use has implied more innovation and creativity.

One of the most popular results of these advancements is cryptocurrency. Digital currency has gained an incomparable and immeasurable attraction worldwide since its introduction. It works using an established network of fast computers and a digital ledger called a blockchain.

This network quickly solves the balance of different accounts using data mining techniques. It is important to deal in crypto coins using real, profitable, and reasonable software. Platforms like are excellent mediums to buy crypto coins easily.

Against numerous advantages, it has a significant downside, i.e., crimes. One of the most worrisome crimes it leads to is money laundering. It means a technique of showing an illegal income as a genuine & legal income in the books of account.

There are various things to understand regarding crypto laundering, i.e., how it is done and different aspects of the same. The following sections will describe these points in detail.

3 Crucial Phases Of Money Laundering Using Crypto

People are well aware of how money laundering takes place using cash. But, there are noteworthy differences found in crypto money laundering. The most common difference is the various stages found in the crime. There are three stages found in crypto money laundering, highlighted below.

1. Placement


A person can purchase the crypto coins using standard cash or a crypto coin. There are various platforms that provide crypto dealing services. These different platforms have different levels of regulation and policies.

Anti Money Laundering is the regulating body of money laundering cases in a country. This party does not have a uniform law system across the world. When an exchange does not follow a rigid trading structure or AML regulations, there are high possibilities of money laundering.

The AML-regulated exchanges involve the KYC process. Through this mechanism, every purchase and selling record of a party is revealed. A transaction is confirmed from both ends (customer and seller). Therefore, the chances of money laundering are reduced while trading on such platforms.

2. Hiding

Anonymizing services are becoming popular for their privacy maintenance feature. These services make it challenging to identify the source of illegal funds, current status, etc. Criminals use Initial Coin Offering (ICO), in which one digital currency is used to buy another crypto coin. Through this service, they blur out the origin of the illegal transaction.

3. Integration


This is the last stage in money laundering, where the source of illegal currency is completely washed out. Integration is a practice of explaining the existence of illicit coins as a legitimate income.

A trader should take the help of a profitable business that has witnessed a rise in its value. Integration becomes easier when a person deals in cryptocurrency with immense value fluctuations. Apart from these techniques, criminals also use an offshore company accepting crypto payments to hide an illegal income.

6 Common Ways Of Crypto Money Laundering

The following practices are the most popular techniques for covering illegal crypto payments and incomes.

1. Tumblers


Tumbling is the most effective money laundering practice, whereby the transaction is mixed by transforming the coin address multiple times. After modifying these different addresses, they are reassembled.

In this technique, the coin goes through a series of temporary addresses to provide anonymity to the actual transaction. When the money is transferred back to these multiple addresses, a person cannot trace the origin of the illegal crypto coin. This practice is common when people trade in weapons and ammunition.

2. Prepaid Debit Cards

Many crypto criminals use prepaid debit cards to fund different unlawful activities. These cards give a feature of pre-loading to the traders. These cards are valuable means at various stages of money laundering such as placement, layering, integration, etc. The most attractive feature of these cards is that it does not require detailed identity verification while buying another crypto coin.

3. Irregular Or No Rigid AML Regulations


As mentioned earlier, many people prefer trading on platforms following a moderate AML policy. When there are minimal regulations of cryptocurrency exchange, traders can escape the identity checks.

Unregulated market exchange aids a person to transact in different markets regularly, controlling the value of bitcoin. They collect the money to an external digital wallet or, in some cases, as cash. The security of transactions reduces overtime when a platform does not follow AML laws. It gradually loses credibility and trustful users.

4. Crypto ATMs

There are over 33,896 cryptocurrency ATMs existing worldwide. These ATMs facilitate the purchase of cryptocurrency with a debit or credit card. They also enable a buyer to purchase bitcoins against a paper currency with the help of a unique wallet address.

These ATM transactions are operated and managed by reputed financial institutions. However, these institutions lack proper execution of different regulations. This poor implementation leads to many drawbacks, including money laundering.

5. International Transactions


A peer-to-peer network is a common way of money laundering where a trader uses a third party to complete an illegal transaction. These act as mediators in the transaction. These third parties are usually located in other countries with a decent public image.

The traders generally select the middleman in a country with minimal AML regulations or infrequent checks. Through the intermediaries, the person transforms the digital coins into paper currency (cash) to purchase high-end products or goods.

6. Gambling & Gaming Sites

Many gambling and gaming sites have a payment mechanism accepting crypto payments. A person can initially buy credits or points using cryptocurrency through this payment structure. Eventually, they can convert the chips or points into real cash.


The money-laundering ways mentioned above expose the negative side to different cryptocurrencies. However, when a person trades on an authentic platform with decent AML regulations, they are free from any risks that result from crypto money laundering cases. Therefore, a person should research well before selecting a crypto trading platform.