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‘Binance CEO stepped down, Binance fined in billions, Binance is banned’ This is what money laundering can do to a compliant crypto exchange. Imagine, what would happen if it was a non-compliant one. It is the back and dark side of the cryptocurrency industry. If you’re keeping yourself updated in this sector, you may know about this incident that happened to Binance in the US, Canada, Nigeria, India, and More. Crypto exchanges are now working hard to stop this illegal activity in their venture, but the criminals are finding a new way to break into it.
In 2023, unknown crypto accounts shuffled around $22.2 billion worth of crypto. Yes, the report from Chainalysis won't be wrong. The amount of this illegal money is more than most of the country's GDP. That's why government agencies are closely watching the crypto exchanges.
Cryptopreneurs also got worried and searched for ways to stop these issues in the future. In this blog, we will learn about how hackers are using non-compliant crypto exchanges for money laundering, and how a top-rated crypto exchange development company can help to make an exchange safe and secure.
Non-compliant crypto exchanges are the platforms that don't operate by the rules. They skip out on essential regulations like Know Your Customer (KYC) and Anti-Money Laundering (AML) policies. While this might seem like an easy way to trade cryptocurrencies, it opens the door to some serious criminal activities.
Non-compliant crypto exchanges are the place where you can move large amounts of money without anyone asking questions. Sounds like a dream for criminals, right? By bypassing KYC and AML checks, these platforms become the perfect place for money launderers.
Money laundering through crypto is all about making dirty money look clean. But how it usually goes down?
1. Placement: The criminal deposits their ill-gotten gains into a crypto wallet. This could be in the form of Bitcoin, Ethereum, or any other cryptocurrency.
2. Layering: This is where the magic happens. The money launderer moves the crypto around through multiple transactions. They might use several different wallets, trade between various cryptocurrencies, or even use non-compliant exchanges.
3. Integration: Finally, the "clean" money is withdrawn and integrated back into the economy. It could be used to buy luxury items, invest in legitimate businesses, or anything else that won’t raise eyebrows.
You might be thinking, "Why should I care about money laundering? I’m just here to trade some crypto!" Firstly, in addition to attracting illicit activity, non-compliant exchanges put your funds in danger. These platforms are more likely to get shut down by authorities, and when they do, your funds could be locked up or lost forever.
So, how do you avoid the dark side and keep your crypto clean?
➤ Choose a Reputable Exchange: Do your research. Look for established platforms with a proven track record of security and compliance.
➤ KYC is Your Friend: Don't be afraid of KYC checks. They're there to protect everyone.
➤ Transparency Matters: Choose exchanges that are open about their security practices and AML policies.
➤ If it Looks Too Good to Be True, It Probably Is: Super low fees and zero verification? Sounds like a red flag. Stick to reputable platforms.
Andreessen Horowitz said, 'Crypto is like the early days of the internet. There's a lot of noise, a lot of scams, but also a lot of potential.' Yep, as crypto enthusiasts, cryptopreneur, or a person who is planning to invest in it, we all must make a move to build a better and safer future for digital currencies.
While many industry pioneers are struggling with illegal activities in their crypto exchanges, entrepreneurs are getting better chances to launch their own platforms to grab the empty space in this market. So, how can you do that? A well-known centralized crypto exchange development company can help with that. With a reputed development partner, business owners can ensure their user’s funds are safe and secured, by implementing anti-money laundering (AML) and, better KYC verification.
Remember, building a successful exchange requires experience and significant resources. But if you have the ambition and the capital, it can be a rewarding journey with an industry-leading crypto exchange development company. Last but not least, crypto has the potential to revolutionize finance. But to reach its full potential, we need to stamp out money laundering in the shadows. Be a responsible crypto citizen by choosing safe and secure platforms that prioritize compliance to make this industry safe and clean.
