Criminals have used XRP, the third-largest cryptocurrency, for illegal transactions, despite not often as Bitcoin, blockchain sleuthing firm Elliptic reported.
In a press release on November 20, Elliptic stated that about $400 million of XRP can be traced back to a variety of Ponzi schemes and dark activities. Although “several hundred XRP accounts” may sound like a lot, it occupies less than 0.2% of total XRP transactions. On the other hand, in Bitcoin, the number that has been spent on the dark web is $829 million (0.5% of all bitcoin transactions), according to vendor analysis.
However, the overall impact of bitcoin and other cryptocurrencies on money laundering and other crimes is sparse in comparison to cash transactions.
The XRP’s relation to illicit activities
Tom Robinson, Ph.D., chief scientist, and co-founder of Elliptic said they have begun analyzing XRP for over a year and have identified several hundred XRP accounts that linked to illicit activity – from thefts to scams and the sale of stolen credit cards.
“No matter how much of the amount, it just proves that there is illicit activity going on in this coin” and “therefore, when you are a business handling some of these transactions, you need to be checking for it unless want to be the organization that’s being used to launder those proceeds”, he added.
Tom Robinson
Such concerns are especially acute for XRP’s target market, as well as regulated financial institutions. Ripple, for instance, the distributed ledger technology (DLT) startup that holds an estimated 60% of the XRP supply and periodically sells the tokens to fund operations, has been issuing bank software that uses XRP last few years ago.
“As other cryptocurrencies, XRP is open source and decentralized, its available for everyone to use. XRP transactions that enabled by Ripple are secure and through regulated institutions”, spokesperson of Ripple said.
However, about the relationship with Ripple, Robinson asserted Elliptic was dealing with XRP, the crypto asset only, “We have not had any interaction with the Ripple company”.
Japan’s SBI Holdings (previously known as Softbank Investment) is another big investor in XRP, the company led a $23 million investment round in Elliptic earlier this year.
In an interview at the time, Tomoyuki Nii, executive officer’s overseas investment of SBI Investment, claimed that the bank was attracted to Elliptic because it was the best blockchain sleuthing firm when it comes to XRP.
Besides, the use of crypto to purchase things like stolen credit card numbers on the dark web has been increasingly and Elliptic had found out a number of those sites accepting XRP and other cryptos.
Commenting on this, Robinson underlined that ” when criminal use of crypto-assets such as XRP develops, we pledge to shine a light on this illicit activity, which creates a trust for financial institutions to participate in the cryptocurrency ecosystem. XRP is gaining increasing traction among financial institutions and banks in the APAC region.”
Against illicit use of cryptocurrencies
Recently, Chainalysis, the blockchain analytics firm brought out alerts
for suspicious transactions on 15 major cryptocurrencies. The tool can mitigate regulatory and reputational risks of cryptocurrency exchanges and other financial institutions.
Now crypto companies generally try to incentivize network integrity by setting up bounty programs that reward, which caused white-hack hackers for exposing vulnerabilities. Some industry members like John McAfee argued that authorities should not require cryptocurrency companies and trading platforms to help them control digital currency use in illicit activities.
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