Cryptocurrency Is Harder to Launder Than Fiat Currency

Bitcoin is a tool for terrorists and money launderers. At least that’s what your elected officials believe. When western leaders are pressed for their thoughts on cryptocurrency, that’s invariably the first sound bite to leave their lips, followed, occasionally, by a begrudging acknowledgement that “the underlying blockchain technology has potential”. But as the case of the $400 million of NEM stolen from Coincheck last week shows, laundering huge amounts of cryptocurrency is surprisingly hard. Laundering fiat currency, on the other hand, is extremely easy when you know how.

Coincheck, NEM and the Curse of the Tainted Crypto
Cryptocurrency is Harder to Launder Than Fiat Currency
Coincheck’s glum president at a press conference on Friday.
After successfully extracting over $400 million of NEM from Coincheck’s hot wallet last week the hackers must have been ecstatic. In a single transaction they had pulled off the biggest digital heist of all time. Those smug grins swiftly gave way to frowns however as the thieves pondered the best way to offload their ill-gotten gains.

In the real world, there is no blockchain to monitor the movement of U.S. dollars in real-time. Laundering cash in small amounts is as easy as walking into a casino, and in larger amounts easier still if you have a cash-based business for that express purpose. But on the web, the blockchain sees and records everything, making it easy for observers to monitor the movement of stolen funds as they are disbursed. In the last few days, the NEM hackers have started moving their haul, but are encountering major difficulties in finding an exchange that will accept it.