crypto strategy

Increase the number of sanctioned crypto addresses

By Elizabeth Kerr, financial journalist

The US Office of Foreign Assets Control (OFAC) leads the fight against crypto-related crime. In 2022, OFAC sanctioned 350 crypto addresses linked to illegal activity.

Image/crypto market

Crypto crime is a real and pressing concern for governments around the world. Bad actors have been exploiting people’s crypto investments for years, stealing billions of dollars from unsuspecting investors. Worse still, crypto funds serious crimes including human and drug trafficking, money laundering, and ransomware attacks. We need urgent intervention to stem these vices.

The US Treasury Department’s OFAC has taken up this challenge and is leading the charge. OFAC tackles crypto-related crime by penalizing crypto addresses linked to illegal activity. CryptoMonday reports that OFAC sanctioned 350 such addresses in 2022, a 250% increase from 100 in 2021.

A wake up call
CryptoMonday CEO Jonathan Merry spoke about the growing number of OFAC-sanctioned crypto addresses. He says their spike is a stark reminder that the scourge of illegal activity is alive in the crypto space. As such, it is a rallying point for greater efforts in combating these vices. He explained:

The 250% increase in sanctioned crypto addresses is a wake-up call for the crypto industry. It is a reminder for the crypto community to come together and put strong measures in place to ensure the security and integrity of the crypto ecosystem.

OFAC’s success in combating illicit activity in the crypto space speaks volumes about the importance of collaboration. The agency has gotten a significant boost from cooperative centralized exchanges, which allows it to track suspicious crypto addresses. Additionally, blockchain transactions effectively provide an inherent level of transparency in monitoring digital currency movements.

A change of strategy
OFAC’s strategies for combating illicit crypto transactions have changed significantly in 2022. Rather than just focusing on individual criminal actors, it has broadened its reach and now hunts down crypto entities. This increased focus has already paid off, as highlighted in a report by Chainalysis revealing that the agency sanctioned ten entities complicit in crypto crimes, some of which had up to 100 associated crypto addresses.

Garantex, a Russian cryptocurrency exchange, is high on the list of ten sanctioned entities; Hydra, a dark web marketplace; and Tornado Cash, a crypto mixer. All three ended up in OFAC’s crosshairs for money laundering. Additionally, Hydra drew sanctions from OFAC for running a criminal market.

OFAC’s efforts have yielded mixed results
OFAC sanctions certainly hit Hydra hard and forced it to founder following multi-jurisdictional action that resulted in the seizure of its main servers. Grantex has managed to stay afloat, ironically profiting from America’s avoidance as its huge domestic market and Russia’s refusal to follow OFAC sanctions have allowed it to increase volumes.

Meanwhile, Tornado Cash took down its website in response. But authorities failed to completely take down the platform due to its decentralized nature. According to Chainalaysis’ report, however, entries into the mixer fell 68% after OFAC sanctioned it.

What is clear is that sanctions are working, and with intergovernmental cooperation, they can do more to clean up the crypto landscape.

Source: CryptoMonday

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