Investigation of AML Instances Around Blockchain Technology for the First Half of 2022

Blockchain Anti-Money Laundering Status

  • Tether: In the first half of 2022, 132 ETH addresses were blacklisted and the USDT-ERC20 assets held on these addresses were frozen.
  • Circle: In the first half of 2022, 18 ETH addresses were blacklisted and the USDC-ERC20 assets held on these addresses were frozen.
  • The US Treasury Department sanctioned Ronin Network hacker (LAZARUS GROUP) associated addresses on April 14, and it sanctioned a bitcoin mixer, Blender, on May 6. It is worth mentioning that the US Treasury Department has never before authorized a bitcoin mixer.
  • Chainalysis: On March 10th, an on-chain database contract called SanctionsList was formed, banning a total of 31 addresses.
  • SlowMist: On April 27th, the MistTrack anti-money laundering monitoring system, which focuses on preventing cryptocurrency money laundering operations, was formally introduced.
  • Initial stage: Convert all stolen funds on the ETH network to ETH and transfer all ETH to Tornado Cash (in large quantities) or a trading platform (small amount).
  • Middle stage: Funds withdrawn from Tornado Cash were in batches and converted into renBTC tokens before being transferred over to the BTC blockchain.
  • Later stage: After withdrawing renBTC, the funds were pooled and transferred to Coinjoin, a mixer on the bitcoin blockchain.
(Tornado Cash Deposit/Withdrawal Chart for the First Half of the Year)
(ChipMixer Deposit/Withdrawal Chart for First Half of the Year)
(Diagram for Initial Funding)
  • ETH Money Laundering Flow Chart
(ETH Money Laundering Flow Chart)
(Platform Percentage of ETH Laundered)
  • BTC Money Laundering Flow Chart
(BTC Money Laundering Flow Chart)
(Platform Percentage of BTC Laundered)

Tools & Methods Used

(MistTrack — Example Diagram of Anti-Money Laundering Tracking System)
  • AML Risk Score
  • Address Labels
  • Investigations
(MistTrack — Example Diagram of Tracking Analysis)

Extended Methods — Data Analysis

(Dune Dashboard — Tornado Cash Withdrawal Analysis)
  • We identify ChipMixer’s withdrawal characteristics.
  • We then scan and filter the structured block data for the relevant time period based on the aforementioned withdrawal characteristics. Then we collect ChipMixer’s withdrawal records within this time frame.
  • We categorize the withdrawal data and verify the results with the highest probability.

Summary

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SlowMist

SlowMist

SlowMist is a Blockchain security firm established in 2018, providing services such as security audits, security consultants, red teaming, and more.