Cryptocurrencies are 'easily traceable' and not as anonymous as you think - Michel Gromic

Cryptocurrencies are ‘easily traceable’ and not as anonymous as you think – Michel Gromic

Michal Gromic, co-chair of the Digital Asset Task Force, a committee of the Global Coalition Against Financial Crime, said cryptocurrencies such as Bitcoin are “easily traceable.”

Potential criminals cannot easily escape from law enforcement.

“Doing transactions on the blockchain and feeling that you are going to run away and be unpunished is not right,” he said. “Most suspects can be easily tracked down.”

Gromik said that currency exchanges are usually subject to KYC (know your customer) and anti-money laundering regulations. This makes it easier to track down criminals.

“At the global level, there is a Financial Action Task Force…to ensure that crypto brokers are subject to compliance.” [legislation],” he explained. “When you send money to another wallet, and then to a sanctioned entity, this is still visible on the blockchain… and it can still be reported.”

Gromic spoke with David Lane, broadcaster and producer at Kitco News, at the Future Blockchain Summit in Dubai.

Financial Crimes

Gromic said it was “not very smart” to use “fake anonymous” cryptocurrencies such as Bitcoin or Ether to conduct illegal transactions.

“According to reports, illicit activities on the blockchain account for about 0.15 percent of all transactions,” he said. “Doing transactions on the blockchain with anonymous currencies is not a smart thing.”

Since the blockchain stores data about all transactions and wallet addresses, the police can use this data to track down criminals.

“Just type in different addresses for the cryptocurrency and you can see how the transactions are flowing,” he said.

Gromik said that even cold wallets that are offline are not impervious to monitoring, because cold wallet holders who want to use their money will eventually need a hot wallet.

Hackers and scam artists

In order to prevent funds from being stolen from crypto fraudsters, Gromik said, investors should “choose active partners in a trusted jurisdiction, and work with a good regulator.”

“Some of the organizers, they ask you [crypto companies] Post your code to them, and then they review your code,” he said. “And then there’s an approval trust saying that this code, this token, or this solution has been approved.”

However, he emphasized that there is always a “risk” when investing in new products.

“You have to have a certain amount of confidence that everything we do on a global level will produce results that are accessible to everyone,” Gromic said, referring to the regulators’ mission.

Privacy coins?

Monero, a proof-of-work cryptocurrency that uses complex tokens to hide wallet addresses, is called a ‘privacy coin’, which aims to protect both anonymity and users’ privacy. This is in contrast to Bitcoin, where the wallet address can be used to identify users.

However, even so-called privacy coins like Monero can be traced back to law enforcement.

“There are still tools we can use for privacy coins as well, which are used to identify suspects who are committing certain crimes,” Gromic said.

For Gromik’s thoughts on Central Bank Digital Currencies, watch the video above.

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Disclaimer: The opinions expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot. Nor does the author guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to conduct any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article will be liable for losses and/or damages arising from the use of this publication.


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