Researchers have discovered a new way of laundering money through bitcoin, which is that only certain miners process transactions and receive huge fees.
According to a document published by Elias Strehle of the Blockchain Research Lab and Lennar Ante of the University of Hamburg, this method of money laundering through Bitcoin has been called “exclusive mining.” The system works like this: someone posts a transaction through a private channel and gives the only miner or mining pool the exclusive right to confirm that transaction and receive a commission for it. These transactions are added to the blockchain just like regular transactions.
Strehle notes that he is not the first to articulate this concept, but his research was first described in a scientific publication. According to Strehle, scammers can use this method in the following way: for example, if someone wants to launder millions of dollars through Bitcoin, they can create a series of transactions with huge fees that the miner who confirmed them will receive. Then the miner displays the BTC received as a commission on the exchange and exchanges it for fiat currency.
After that, the income is divided between the participants in the scheme. Everything looks legitimate as this is the income generated from Bitcoin mining. The researchers noted that exclusive mining is quite difficult to detect and eliminate. CipherBlade CEO Rich Sanders commented on the study’s method:
“I haven’t come across this. However, I have already seen how mining is used as a method of money laundering, but in a less complicated way. Usually, a deposit is made to the NiceHash mining pool, which, from a functional point of view, will be equivalent to a deposit in an internetwork exchanger. “
He added that this is an “interesting” method, but more likely to be used by sophisticated users. “This is not an option that the average person would use, at least for now. It’s too complicated technically, so unless someone comes up with a ready-made solution, I doubt we’ll see ubiquitous use of this method. “
There are other legitimate uses for exclusive mining, Strehle said. This opens up a whole new market for private mining where you can pay a miner a flat fee to process your transaction. This would circumvent the escalating fee system or ensure that none of the miners play foul play.
“It seems to me that this will become more and more important as the reward for mining a block will decline and miners will increasingly have to look for other ways to secure their income,” Strele said.
Recall that the Mexican financial intelligence recently conducted a second national risk assessment, according to which the risk of money laundering in the banking sector is much higher than the risks of such crimes in the field of cryptocurrencies.