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The best ways to store your digital money

Looking for the most effective way to store your digital currencies? In this article, you will get to know a lot of interesting things about the latest services to store your funds in the most convenient way for you. If you want to be confident that your funds won’t be stolen or hacked, read this article.

Today, digital assets have become popular and have been adopted by a vast audience. Many worldwide companies allow their customers to pay for their products and services by BTC and other crypto-assets. A lot of companies refuse to sell their products and services for fiat money. The wide adoption of cryptocurrencies ensures producing different wallets to hold and trade coins.

There is a huge number of wallets that lure customers with different benefits and functions. Let’s consider each of them in detail.


Do you want to be confident in the “purity” of your funds? You don’t need to use additional services to protect your funds anymore. Pay attention to AMLSafe. It’s a mobile wallet allowing to trade, exchange, send, and receive more than 1500 cryptocurrencies, including BTC, ETH, LTC, BCH, etc. The most important advantage of this wallet is the high level of safety and reliability provided by the in-built AML-module. Due to this module, all the incoming assets are checked for “dirtiness” and involvement in illegal activities. Before digital assets come to your wallet, an in-built verification service will trace the transaction. Using this app, you will protect your funds against fraud, scams, stolen coins, assets from the dark market, etc. This crypto wallet allows you to purchase cryptocurrencies by your credit card. It’s compatible with Android and iOS.


It’s designed for experienced customers. It can boast private key encryption and 2F authentication, enabling a high level of protection against hacking attacks, thefts, and vulnerabilities. It has an in-built multi-signature feature that allows using the wallet by multiple users. In addition, it supports different hardware wallets.

It’s available to use on the mobile phone as well as on the desktop. While storing coins in the cold wallet offline, you can process transactions from the computer.

You won’t get high-quality support by using this wallet.  It’s compatible with hardware wallets. It’s not designed for customers who want to hold diverse coins because it allows storing only BTC.


It offers different options that allow installing a wallet on the smartphone or laptop or using it as a hardware device. While creating Exodus’ account, you get access to live charts and portfolio data, customer support 7 days a week, and much more. It’s created for more than 100 different crypto assets.

One of its main benefits is the partnership with Trezor. This option allows you to store your funds most reliably and trade at the Exodus platform. Generally speaking, this is a hybrid of hot and cold wallets due to the partnership with Trezor. However, it’s designed for more software-minded traders. One of the essential disadvantages of this wallet is high fees discharged for the use that amount to from 2 to 5 percent.


Looking for the most reliable place to store your assets before you want to sell them? Pay attention to MyCelium. It’s compatible with hardware wallets. It allows you to store BTC, ETH, ERC-20 tokens.

It was designed in 2008, and since that time, it has provided its customers with a wide assortment of benefits. Among them, we can emphasize cold storage of crypto-assets, spending and saving accounts for BTC investors, and interoperability. The developers of crypto wallets have implemented this feature to allow sending and receiving coins through different networks and wallets.

Additional features list contains a possibility to trade your crypto assets without any additional exchanges.


This is a company offering encrypted hardware wallets with in-built secure chips. Using this cold wallet, you can store your funds most reliably. Among its main advantages, there are different types of encryption and protection against hacking attacks and thefts.

While using this device, you can store around 126 different coins. In addition, it offers 280 200 tokens. It allows backup and recovery of any assets. It’s compatible with Android. In addition, you can install it on the desktop.


One of the most easy-to-use crypto wallets is ZenGo. It’s developed for beginners in the cryptocurrency world. It’s compatible with iOS as well as Android. A huge number of wallets require a seed phrase that consists of 12-24 words in order to restore your private key.  ZenGo allows using biometric scanners installed on smartphones to provide users with a high level of security. Using this wallet, you can purchase and buy diverse cryptocurrencies. This feature allows using an app for beginners and intermediate users.


If you are interested in the highly secured storage of your digital assets on the hardware device, Cobo’s best choice. While using Cobo, you can store different cryptocurrencies, including LTC, ETH, BTC, etc. It has an in-built EAL 5+ Secure Element and QR code to protect its users against vulnerabilities.

However, while choosing Pro or Ultimate plans, you get a unique feature that provides customers with the self-destruct mechanism. If your assets are threatened to be stolen, this mechanism will help delete all the information from your device automatically.

It allows holding more than 30 cryptocurrencies and 700 tokens.

The main disadvantage of this wallet is the high fees. A simple version costs $119, a version for professionals costs $169, and an advanced version costs $479.

Wasabi wallet

It’s compatible with all the most popular OS. This is a high-quality hot wallet that you can install for free. With this wallet, your digital assets are protected against the involvement of third parties.

This feature increases the level of security. It allows avoiding the risk of stolen crypto assets. You can install it on any desktop device. However, it’s not available to set up on iOS and Android.

The main benefits list of this wallet includes a high level of privacy that protects it from the involvement of third parties.

Shift Crypto

If you are an ultimate newbie, it’s designed for you. Using it, you can use your funds offline without the possibility to trade your assets. It’s designed for the storage of more than 1 500 different digital assets. However, there is an edition designed exceptionally for BTC.


In conclusion, there is a huge number of high-quality wallets for allowing you to store and trade your digital assets. Each of them has its advantages and disadvantages. You can choose the most suitable for you. If you are looking for the most сross functional wallet, you need to pay attention to the Exodus wallet. If you are an ultimate beginner and looking for an easy-to-use cryptocurrency wallet, you should choose the Shift Crypto wallet. If you want to use the most reliable hardware crypto wallet, then select Cobo. If you want to protect your cryptocurrencies against “dirty” transactions, then pay attention to the AMLSafe wallet with an in-built AML-verification service.

Why is KYC Important for Crypto Exchanges?

Money laundering is one of the main financial problems all over the world in 2021. However, there are several ways to solve this problem. Among the most popular solutions, there are AML services that help to track your transactions and the implementation of KYC. Let’s consider why KYC is so important for crypto exchanges.

Trustful and transparent transactions

The principle of trustworthiness is very important for the owners of cryptocurrencies since crypto exchanges can have a rich history of hacking attacks and scandals. Due to the implementation of KYC procedures, exchanges can reach a high level of trustworthiness. Identity verification systems help identify customers of exchanges and differ frauds from legitimate customers. While KYC procedures are used, a new customer of the crypto exchange can be confident in trustworthiness and protection against criminals. This is especially essential for P2P exchanges where customers trade with each other without any third parties.

The risk of financial crime

There is a huge number of illegal activities related to cryptocurrencies, starting from tax fraud and ending with corruption, terrorism funding as well as online banking hacks. Financial illegal operations reach around $ 1, 4 to 3, 5 trillion a year worldwide. Around $2 trillion is laundered. Crypto exchanges are a space for big financial crime. In 2019, crypto exchanges and their users were hacked on 4, 26 billion. There are users with different intentions using the services of exchanges. This can cause hacking attacks, scams as well as phishing. For instance, hackers have stolen $ 40 million on the largest crypto exchange Binance. In order to prevent hacking attacks and scams, the KYC policy is implemented in crypto exchanges. According to the regulations published on 20 July 2021, all cryptocurrency exchanges need to implement KYC verification services enabling them to identify the personality of each customer. KYC services allow reducing the chances of financial crime via identification and verification processes. Due to these procedures, crypto exchanges can avoid criminals and clients with a high level of risk while protecting against illegal activities related to the exchanges or crypto wallets. Let’s consider what KYC means and its main functions.

KYC means “know your customer”. It aims to verify a customer’s identity. The verification process is collecting the user’s information, including the customer’s identity, a valid identification card, utility bills, etc. During the registration process, clients of exchanges are required to provide a service with all the KYC information. In addition, you need to give your identification information while your data is changed. Without providing a service with all the necessary information, customers won’t get access to all the features of the cryptocurrency exchange. For instance, the cryptocurrency exchange Binance provides clients with the possibility to create accounts, use the main functions, and process a limited number of transactions without KYC identification. If you want to get access to the full functionality of the service and enhance deposits and withdrawal limits, you need to provide a platform with all the KYC information.

Which processes does KYC consist of?

KYC procedure consists of two main processes, including data collection and verification. There are main processes involved in the KYC procedure: Customer Identification Program (CIP) This is the main part of the KYC procedure. During this part, all the customer data are collected and verified. This process comes after the registration of customers at the exchange. 2. Customer Due Diligence (DD) After the verification of the customer’s data, a company needs to check the customer. The main purpose of the background test is the identification of probable risks. While performing a background test, a customer is checked whether they had been involved in fraud or no. 3. Ongoing Monitoring The main purpose of the ongoing monitoring process is to identify whether the data is actual or no. In addition, this procedure checks suspicious transactions. Depending on the results of the investigation, the exchange can bun the customer’s account and send the data to the regulatory structures.

Functions of KYC

A list of the most important functions of KYC includes: Trust and confidence between customers Stabilization of the crypto market Compliance with AML crypto regulation Let’s consider each of them in detail.

A high level of trust and confidence

KYC provides customers of exchanges with a high level of trust and confidence. P2P trading platforms allow their customers to trade with each other without involving third parties. It’s very important for users of these platforms to be confident in the legality of these transactions. They need to trust each other. If scammers, criminals, or frauds appear on the platform, users don’t want to trade at this platform anymore. Among the most important risks, that customers face on P2P platforms, we can emphasize dirty money tricks, social engineering, commas scams, and much more. So, the main function of KYC is to protect participants of the platform against suspicious users and “dirty money”

Stabilization of the Crypto Market

As it was announced, one of the main purposes of the AML policy is to stabilize the cryptocurrency market. The absence of solid trust among the users prevents the mass adoption of cryptocurrencies. Therefore, AML programs will ensure the demonstration of the cryptocurrency exchanges as legal entities protecting their customers against scams and “dirty money”. KYC programs help cryptocurrency exchanges to identify all the risks of transactions and provide honest customers with a high level of safety. A high level of trust among the customers will impact the stabilization of the cryptocurrency market overall in the future.

Compliance with AML crypto regulation

Non-compliance with AML crypto regulation is considered to be a serious risk to national security in the US because it facilitates money laundering that is a real threat to the economy overall. If crypto exchanges are non-compliant, a criminal fine reaches $20 million. According to the AMLD5, non-compliant exchanges and wallets need to pay fines of 200,000 EUR per violation. If a crypto exchange meets all the requirements of the KYC and AML procedures, it’s protected against these lofty on-compliance fines. In conclusion, in order to build a transparent cryptocurrency market built on trustworthiness and safety, new AML cryptocurrency regulations were announced on 20 July 2021. According to the new AML policy, crypto exchanges need to implement the KYC policy that will ensure reliable and safe cryptocurrency trading in the future. The main functions of KYC include building trust and confidence between customers of the exchanges, stabilization of the crypto market overall, and compliance with AML crypto regulation.

What is a castodial wallet and noncastodial wallet?

When it comes to using cryptocurrency, the most important thing is to own a crypto wallet. It’s required not only to store funds, but also to perform any operations with assets. Today we will talk about custodial and noncustodial wallets and will determine the type of wallet you need for your personal use and security.

What is a custodial wallet and noncustodial wallet?

A custodial wallet is a wallet in which your private keys are stored by a third party (for example, an exchange). This way you don’t have total control over your funds, and it makes the choice of this kind of wallet somewhat dubious.

At the same time this wallet has the following advantages:

  • you can manage your funds very quickly anytime from any device with the Internet connection;
  • low risk of losing access to your funds.

The main disadvantages of such wallets are:

  • you can manage your funds, but so can operator;
  • funds on your account can be withdrawn by decision of a court;
  • you wallet can be hacked.

This wallet in its function is very much like bank instruments – you don’t completely control your money inside it. Sure, you own your money, but they are in the hands of a different company.

Here are a few examples of custodial services that provide you with a wallet to store your funds on their side:

  1. Bitfinex is one of the largest companies in cryptocurrency space. However, in 2016, Bitfinex suffered the biggest ever disaster when hackers stole 120,000 Bitcoins, and Bitfinex had use their operating revenue to pay compensations to its users.
  2. Bithumb is a Korean cryptocurrency exchange service. It supports 10 cryptocurrencies and is one of the leaders in trading volume per day. In 2017, the service was hacked, 1.2 million Korean won was stolen from user accounts.
  3. Cryptsy is an American crypto exchange founded by Paul Vernon. The platform traded Bitcoins and Litecoins. The service was eventually hacked, the hackers took possession of over $5 million.
  4. Coinbase is the largest cryptocurrency exchange which also suffered a hacker attack.
  5. Mt.Gox is the infamous crypto exchange, among the first on the market and worst hit by hackers, who made $8 million disappear from user accounts.
  6. BTC-e is the largest Russian exchange. In July 2017, it stopped working unexpectedly, and its director was arrested.
  7. Poloniex is quite a well-known large exchange with over 100 cryptocurrencies for trading. In 2018, it suffered a huge hacker attack when the thieves tried to get hold of user accounts.
  8. Kraken is an American exchange with 2F authorization. However, during 2018, some of its clients were hacked.

These days, several types of multi-currency crypto wallets are used to store cryptocurrencies on the crypto exchange account:

  1. Freewallet – within the platform, Freewallet users can create mobile crypto wallets to work with tokens. It can store various options of cryptocurrencies (Bitcoins and Altcoins). In 2017, users started to complain that Freewallet sent its money to unknown addresses.
  2. is a partially centrilized wallet. However, it also suffered several major thefts.
  3. – this mobile app was the first of a kind, unlike software for desktop computers, it was specifically designed for tablets and smartphones. The client connects directly to the network, and that eliminates the possibility of third parties getting your confidential data and access to existing assets.

Noncustodial wallets are safer because you yourself control movements of your funds. This kind of wallets are:

  • web wallets;
  • paper wallets;
  • mobile wallets;
  • desktop wallets;
  • hardware wallets.

Web wallets are stored in your web browser. You can access your account from any device entering your private key.

Hardware wallet is considered to be the safest way to store cryptocurrency. The wallet is a device resembling a flash drive. It has no access to the Internet, that’s why hackers can’t remotely get access to your account.

Mobile wallets are installed on a smartphone or a tablet. There are numerous wallets of this sort, but you have to be careful which Bitcoin wallet to choose, paying attention to safety and authenticity of a wallet. Read comments before you install a wallet. If you install an app from a developer’s website, the risk of downloading a fake app is eliminated.

Desktop wallet is a software installed on your computer. Currently there are several digital solutions of this kind, depending on what cryptocurrency you want to store and the operating system of your computer. You can use this wallet only if you have an Internet connection. But since the keys are stored on the computer itself, there’s a possibility of theft if a hacker gets into your computer.

With paper wallets, you print your public and private keys on a sheet of paper. This way your cryptocurrency is stored offline, but you can connect to the Internet from any device and enter your keys. Storing cryptocurrency on paper is like keeping your money in a piggy bank.

Summing it all up, a noncustodial wallet is the easiest way to use cryptocurrency and it doesn’t require special skills to use, but it’s very unsafe. So if you plan on storing big sums of money, you should better choose a light wallet.

UK police: 562 Bitcoin-related blackmail cases identified over the past 2 years

The UK police recently reported that since 2018, it has recorded hundreds of complaints about Bitcoin-related blackmailing. According to a statement dated March 19, Parliament Street analytical center examined the work of 13 police districts over the past two years and revealed 562 reports about blackmailers demanding a ransom in cryptocurrency.

In some districts a burst of blackmailing was massive. In 2018, the North Yorkshire police recorded only 6 incidents. Yet in 2019, it recorded 115 complaints, a detailed statement reports.

In one case, for example, a hacker blocked all of the user’s business data and then demanded Bitcoins if the user wanted them unblocked. He also threatened to increase the ransom for unblocking if the victim did not pay in time. The other common scheme was to threaten to disclose personal information if the victim didn’t transfer money in BTC.

According to the analysis, some districts demonstrated particularly high criminal rate associated with Bitcoin wallets, 89 of them in the Greater Manchester police, 82 in Hertfordshire and 21 in Leicestershire.

Andrew Martin, CEO of Retail Financial Consulting, a technology partner for the banking and retail sector commented:

“The rising tide of digital financial crime will bring a shiver down the spine of consumers, who are already acutely aware of the risk of fraud and blackmail from malicious hackers”, Andrew Martin, CEO of Retail Financial Consulting commented in the statement.

“These incidents underline the risks associated with online currencies, which are often an easy way for anonymous third parties to extort money from victims, without detection”, he added.

Martin also added a note for the future. “Moving forward, it’s time for the big banks to recognise that the aggressive push towards a cashless society is forcing many people to experiment with new forms of investment, some of which come with significant risks”.

It’s worth mentioning that according to statistics, in 2018-2019, 4% of all blackmailing cases in the UK involved cryptocurrencies. The other 96% of cases involved traditional fiat currencies. Besides blackmailing, there are other types of fraudulent activities that you can avoid with the AMLSafe crypto wallet, if you ever think which Bitcoin wallet to choose. Follow the link to learn more. 

Russia Amends Cryptocurrency Law

The amount of cryptocurrency in the “shadow” economy has doubled over the past 4 years, and that was the reason for amending the current legislation. The amount increased as the result of illicit drug and gun trafficking, transfer of digital assets obtained from illegal schemes or activities. In order to regulate the use of cryptocurrencies, the Russian Federation amends anti-money laundering and bribery law using digital currencies.

Crypto bribery

Bribes in Bitcoin and other digital currencies were actively mentioned in the spring of 2019, when the media reported that allegedly employees of the Federal Security Service of Russia (FSB) extorted $1,000,000 BTC bribe from a Russian businessman.

By the end of 2019, the Supreme Court of Russia included the concept of “cryptocurrency” in articles 174 and 174.1 of the Criminal Code of Russia. These articles refer to penalty for money laundering and bribery in cryptocurrencies, along with fiat currencies and other valuable assets.

Memo! AMLSafe multi-currency crypto wallet is on guard to keep your cryptocurrency clean.

Crypto theft, wallet hacking and money laundering

According to media sources, the FSB officers were allegedly involved in the theft of $450,000,000 worth cryptocurrency from Wex, one of the largest online exchanges in the world. Wex was a branch of BTC-e, which transmitted information on Bitcoin transfers and Bitcoin wallet addresses to the Russian military intelligence agency.

Eventually in 2017, BTC-e was shut down for laundering $4 billion in cryptocurrency, as part of the first of its kind joint operation initiated by the law enforcement agencies and several financial crime offices of the US Treasury Department.

The scandal spreaded, and soon a hacker virus (“highly likely” from Russia) was detected on the computers of employees of the Tokyo Coincheck exchange, which was hacked in January 2018. As a result, 500 million NEM tokens worth $530 million were stolen. This is the largest theft in the history of cryptocurrency exchanges.

In 2019, the Supreme Court of Russia declared cryptocurrency theft a criminal offense, followed by introduction of new amendments to the digital currency regulation. The Court further instructed the Central Bank of Russia to amend anti-money laundering laws regarding cryptocurrencies.

On February 17, 2020, new amendments to the Law on Digital Financial Assets were published. Now, no matter which Bitcoin wallet you choose, any cryptocurrency transaction is classified as a potential risk of money laundering, and accounts can be categorized as “doubtful transactions”. More than that, according to the new amendments, a crypto wallet and all of its assets can be frozen while the investigation for illicit obtaining of digital funds is in progress.

AMLSafe is the first cryptocurrency wallet which shows that your digital assets are not linked with money laundering or terrorism financing. AMLSafe is available for download in Google Store

The Central Bank and the FSB have already banned the use of cryptocurrency as a payment method. In order to deanonymize all cryptocurrency users, the regulation allows the exchange of cryptocurrency for rubles at special exchange points.

Russia is amending its legislation on digital currency together with the Eurasian Economic Union and the BRICS countries. This can buy some time to study the cryptocurrency market, as well as develop new amendments in order to regulate the cryptocurrency market. Besides, new ways to stimulate innovations in cloud platforms and mobile digital payment solutions using Bitcoin and other digital currencies can be created.

Blockchain analysis helps shut down “Mr. Dark’s dark site”

Dutch citizen known as “Mr. Dark”, who profited off rape videos and child pornography and gained $1.6 million using cryptocurrency, was indicted by the District of Columbia Jury.

Michael Rahim Mohammed, 32 y.o., managed a website called “Dark scandals”, which started working in 2012 on both the Internet and the Darknet. Over 2000 videos and images were stored on the server, and according to the statement on the website, “contained real episodes of blackmailing and sexual assault all over the world”.

Terms of service of the “black” website

Website users could pay with Bitcoin and Ethereum to download “packages” of illegal content, as well as upload own videos to the media library. The website received over 1650 cryptocurrency deposits, among which 188 were in Bitcoins and 26.7 were in Ethereum.

According to the website requirements, “fake, amateur, staged and already exposed movies” were prohibited. The rules insisted on presenting “real violence” content and underlined that “home production content” was in favor.

Connection with crypto wallets

While cryptocurrency financed the website, it also stored all the criminal details on the blockchain.

Law-enforcement authorities managed to trace down 303 BTC and ETH cryptocurrency wallets from which deposits to the website were originated. They used complex software developed by Chainalysis to trace transactions. And although not everyone has access to such services, its main functions are also applied in AMLSafe, which automatically checks assets to reveal any associations with fraudulent activities.

It is now being considered that all the confiscated money, obtained illegally, should be distributed among victims affected by the website’s activity. It’s also stated that many accounts were opened exclusively to make this one transaction (to pay Mr. Dark) and their KYC processes were incomplete. The analysis also helped to reveal other illegal addresses: “These accounts were used to make multiple payments to other Darknet services. These services were previously flagged by analytical blockchain companies, and this fact helped the law-enforcement authorities reveal illegal transactions”.

Darknet in not that dark anymore

The website was shut down after the launch of an international investigation involving American investigators, the Dutch National Police, Europole and the German Federal Criminal Police.

Michael Rahim Mohammed has been charged with distribution of child pornography and other illicit content.

Chef Don Fort of the IRS Criminal Investigation Department mentioned that this case is a wake-up call for other criminals, that the authorities are able to shed light on the Darknet: “Criminals, you must know that if you leave a digital footprint, we will find you. If you exploit our children, we will put you in jail. If you thought you were anonymous, think again. The Darknet today is not that dark anymore, thanks to all the hard work of the IRS-CI and our partner agencies”.

Crypto assets of this criminal website were confiscated, but before it happened the assets could have been used for other payments. That’s why it’s so important for online users who don’t want to be associated with “dark” digital currency to use services like the AMLSafe crypto wallet, which checks for links to illegal activity.

Other ways to use Bitcoin wallet

It’s hardly the first known case when cryptocurrency was used in criminal and dark activities. The main problem with illegal money is that somehow their lawful origin has to be proved to regulatory authorities. Unemployed citizens with luxury cars, huge mansions and multi-currency crypto wallet raise a lot of suspicions. Once the Internal Revenue Service wants proof, it most likely won’t get one.

Since cash is almost impossible to trace, the reasonable question here is: how to turn “dirty” money to cash? In most European countries or in the USA large amounts of cash attract increased attention, that’s why money laundering is an issue. To solve that, a tree-step system is used – “placement-obfuscation-integration”.

This way illegal fiat funds are first transferred to cryptocurrency. Secondly, the asses is broken up into numerous smaller amounts and transferred to different blockchain addresses, so that the origin of the funds is obscured. It’s the so called “wallet zero”. And only then such assets are integrated in one wallet and moved out into legal fiat currency. “Dirty” businessmen frequently invest in real estate and then get money out of it cleaner than before. However, special services stop such attempts even more frequently. It’s getting hard for criminals in the Darknet to escape the law.

This is to remind you to avoid illegal blockchain addresses and stay out of anything fraudelent. So if you want to know which Bitcoin wallet to choose, it’s recommended that you use AMLSafe, the first crypto wallet with automatic AML checking of assets in the world.


How Chinese adepts launder Bitcoins worth millions of dollars

While the whole world is overwhelmed with the Covid-19 situation, some of the celestial people are busy inventing new ways to add money to their crypto wallets. CipherTrace, an analytical platform, has done an in-depth research and analysis on how two Chinese citizens managed to launder cryptocurrencies worth about $100 million. In the USA, they were accused of having previously obtained these Bitcoins illegally hacking the cryptocurrency exchange.

Attention! Let’s make it clear right away, that the AMLSafe service helps to avoid such situations by checking cryptocurrencies for linking to illegal activities.

Anti MoneyLaundering

In retrospect

No matter how complicated was the laundering scheme they invented, all the steps of their scam journey were eventually traced. OFAC, The US Office of Foreign Assets Control, provided evidence that the two Chinese citizens were certainly involved in fraudulent activities, that is the cryptocurrency exchange hacking. Moreover, on March 2, it was discovered that Li Jiadong and Tian Yinying were related to a hacker organization Lazarus, accused of working for North Korea.

According to the US Department of Treasury, the estimated amount of stolen cryptocurrency is $234 million, of which $100 million were transferred to a multi-currency crypto wallet via a labyrinth of different banks and servers (including those registered in North Korea).

Laundering scheme

To stay under the radar, the Chinese scammers carefully planned and applied the so called “peel chains” scheme. The scheme let them bypass the security system of the crypto exchange and do the laundering unnoticed. The accomplices created a whole network of Bitcoin wallets to transfer cryptocurrency to adjacent addresses. After each transfer, a small remaining balance in the amount of 1-5 Bitcoins was transferred back to the crypto exchange.

Overall 146 blockchain wallets were involved in the scheme, and small amount of coins from each of the wallets ended up on the exchange. The equivalent amount in US dollar is $100 million, and they use only two crypto exchanges for this fraud.

Why didn’t the KYC procedure work?

KYC (Know Your Customer) is the procedure used in financial institutions to identify the counterparty before the transaction is made.

To complete the KYC procedure, a user has to present an identification card and address of residence and pass the face verification process. To verify the identity of the owner of the documents a user has to present a photo of self with clearly visible identification information.

Those sophisticated scammers simply used photoshop to deceive the KYC service of the crypto exchange. And not only they photoshopped fake IDs but changed the pictures of the men holding them as well – the heads and the bodies on the photos belong to different people.

In a similar fashion Li linked bank accounts in different banks with his account on the exchange. After laundering the money, he made about 2000 deposits to these banks totaling $32,848,567.

The dangerous consequences

After the laundering scheme was revealed and the connection between the funds and the previously revealed exchange hack was established, all the scammers’ assets, now in possession of physical and legal entities in the USA, must be blocked and transferred to OFAC.

Moreover, all parties making transactions with Tian and Li or with authorized addresses of their wallets, can fall under investigation or violate the sanctions.

113 accounts of virtual assets associated with these theft and money laundering processes may be confiscated by the USA services. This right comes into effect with the fact that these illegal actions affect financial services with customers and accounts from the USA.


Chainalysis company states that the past 2019 year set a record for hacker attacks committed against cryptocurrencies.

On the one hand, the FATF has published the new AML rules to regulate activities in the digital currency segment. According to relevant laws, all cryptocurrency exchanges must verify identities of receivers and senders of digital assets.

On the other hand, KYC is not a panacea and not an ultimate security system. It has its weak spots, as we can see in the Chinese scammers experience.

Services like AMLSafe check the specified crypto wallet with a database of illegal addresses, to prevent a user from receiving assets associated with fraudulent activities like the one mentioned above.

AMLSafe minimizes the risk. This service is recommended to use at all times to decide which Bitcoin wallet to choose and avoid the possibility of being linked to crypto wallets with illegal activity. So before you go on and transfer the funds, check it out, otherwise you risk losing all your digital assets and find yourself in conflict with law.