Cryptocurrency is gaining a lot of public attention. However, while the technology which underlies the digital currencies is evolving faster into the mainstream, there seems to be a holdback on the mainstream adoption of cryptocurrency as a unit of exchange. It is one of the reasons for the digital currency not taking off as anticipated is regulations.
Money laundering case in NY
On April 24, 2019, the first culprits of money laundering facilitated by cryptocurrency were convicted in New York State, US. On the charge, attorneys said that Mark Sanchez and Callaway Crain exploited a loophole in Western Union payments to launder $2.8 million in Bitcoin.
In particular, the culprits used the dark side of cryptocurrency to sell Viagra, steroids, Valium, and Xanax. The pair owned and operated a website called NextDayGear on the dark web. Most of the merchandise was purchased in China and then advertised and sold under different names. An important segment of their market was drug dealers, doctors, and athletes.
Within five years since 2013, the culprits moved over 10,000 packages and generated around $2.8 million while getting approximately $32,000 in shipping costs. Specifically, the pair insisted that their customers paid in Bitcoin since the currency could help the trail of the transaction disappear. The District Attorney on the case expects the culprits to serve between 2.5 and 7.5 years behind bars.
Fraudulent tools
It is a critical situation where Bitcoin helped a crime. A service which enabled the laundering activities is called a mixer. It is an underground website which allows mixing transactions in digital currencies. Such services help frauds to hide the origin or destination of digital currencies in a fraudulent transaction. One such service was closed down in late May 2019 after having “mixed” over $200 million in cryptocurrency.
Collision which authorities
Abetting fraudulent transactions is a major sticking point in the discussion concerning regulatory clarity for cryptocurrency. In particular, many regulators across the globe site the lack of comprehensive security mechanisms surrounding the ecosystem as a hindrance to the goal. Various regulators cite cases like that of the convicted drug peddlers in New York and the presence of platforms which mix crypto as a pointer toward the inherent danger of crypto.
Important stakeholders in the global financial industry are dragging their feet when it comes to defining a clear regulatory environment for the crypto ecosystem. However, there seems to be a varied approach to this issue. For instance, the Supreme Court of India is on the spot for dragging its verdict on whether the country should allow the crypto industry to thrive.
US SEC intentions
On the other hand, the US SEC is seemingly yielding to pressure and could offer a groundbreaking directive on the issue. In particular, the regulator posted a job listing between March 29 and April 15, 2019, in which it was looking to hire a crypto specialist. It is an indication that the SEC would like to understand the sector for possible regulatory consideration better.
World governments can no longer ignore Bitcoin and other cryptocurrencies, it is a technology that is here to say. They must adopt a general legal framework, the sooner they do, the faster this technology will advance.
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