Cryptocurrency owners frequently face the issue of 'dirty' coins, which are assets associated with illegal activities and often blocked on major platforms.
How 'Dirty' Coins End Up in Wallets
Regulated platforms monitor cryptocurrencies with criminal history and record assets involved in illegal transactions. Fraudsters often employ schemes to 'clean' coins, such as mixers, splitting sums, and operating on unregulated platforms. Purchasing such assets on regulated exchanges adhering to KYC/AML protocols is impossible; however, acquisition on unregulated or dubious exchanges is possible.
Tracking 'Dirty' Coins
Regulated exchanges track suspicious coins following regulators' guidelines. Since January 2020, the EU's Fifth Anti-Money Laundering Directive has been in force. Major platforms use special units and technologies like Chainalysis, CipherTrace, and Elliptic to identify and block accounts in violation of AML standards.
Anonymous Cryptocurrencies
Anonymous cryptocurrencies such as Monero were developed to enhance transaction privacy. However, their anonymity has been questioned. Studies show that even after code fixes, vulnerabilities allow tracking of transactions. Monitoring methods like IP capture decrease privacy.
Despite cryptocurrencies' original concept as anonymous money, current realities suggest that anonymity remains an ideal. Countries, companies, and individuals have adapted to the decentralized landscape.