Government regulators haven’t made things easy for anonymous cryptocurrency projects. Monero fans are complaining about being profiled by cryptocurrency exchanges, after Changelly was found to wield the ability to effectively “steal” cryptocurrency from customers.
One user has taken to Reddit to vent their frustrations. After attempting to exchange some cryptocurrency for Monero via Changelly, they were automatically classified as high risk. The funds were immediately quarantined until the account has been cleared of anything untoward.
A Changelly spokesperson has since confirmed the exchange service can indeed withhold suspicious transactions (and hold their funds until users provide further information).
“To all Monero community, our risk management system doesn’t mark all transactions out of the blue,” explained a spokesperson. “[…] Monero is the crypto that hides a sender and recipient thus making transactions untraceable. This [is] a reason why big amounts of other currency got to be checked [sic] before [it’s] converted to XMR.”
Changelly has been quick to clarify that it holds no prejudice towards XMR traders – this is strictly business, nothing personal.
“We have no mistrust of and prejudice towards users trading XMR,” the spokesperson implored. “The matter relates to a Know-Your-Customer procedure that we had to implement due to the increased number of money laundering cases via our service.”
While the spokesperson was adamant that all funds are immediately released once cleared of anything fishy. Affected users would even be white-listed to avoid future delays, but Changelly stopped short of clarifying just how accounts are singled out for additional checks. Hard Fork reached out to Changelly for a statement, and will update this piece should it reply. But, it did confirm what happens to funds when it fails the checks: it keeps all of it (for an undisclosed period of time).
“Once again, our risk management system may put on hold some suspicious transactions and the security department is working hard in order to process such operations in minimum time,” the spokesperson added. “When a customer refuses to provide the required data, we cannot simply return coins as we wouldn’t like to operate and transfer coins that might be potentially stolen or raised by fraud.”
The regulatory pressure is no joke. In June, it was reported that Japan’s Financial Services Agency was pressuring licensed cryptocurrency exchanges to drop support for privacy focused coins. As such, several platforms delisted several popular anonymous cryptocurrencies, including Monero, Dash and ZCash.
The Economist published a great guide to cryptocurrency money laundering. Typically, dirty cash can be “washed” by purchasing cryptocurrency with it, splitting it up and exchanging it for several cryptocurrencies. Do this enough times, with the right coins (like Monero), and it should be clean enough to be swapped back for ordinary money.
CipherTrace’s latest cryptocurrency anti-money laundering report noted that over $1.2 billion in dirty money had been washed by trading anonymous alt-coins like Monero.
Source: The Next Web