The European Union Agency for Law Enforcement Cooperation, the Europol, has raised alarms about the misuse of crypto mining and layer-2 blockchain solutions by criminals.
They think these technologies could complicate law enforcement efforts to track illegal funds and recover stolen assets.
New money laundering method
Europol’s report points to a rise in criminals using crypto mining to hide their illegal earnings, because by channeling dirty money into mining operations, criminals can launder funds and even generate extra profits.
The agency found suspicious activities in mining pools, particularly those used by ransomware groups to support their unlawful actions.
Next to this, the report states pool mining schemes have also been used by scammers to run their Ponzi schemes, and an example given is the BitClub Network, which promised earnings through non-existent pool mining, leading to investors losing hundreds of millions of euros.
Europol wants to see everything
Layer-2 blockchain solutions are known for improving scalability and reducing transaction costs, but Europol sees a dark side too.
The agency warns that technologies like zero-knowledge proofs could make it much harder to trace the movement of funds on the blockchain, and the authority suggests that these advancements might present new problems for law enforcement.
For our safety
While Europol’s concerns are serious, it’s important to recognize that crypto mining and layer-2 solutions aren’tt criminal by nature, as they have many legitimate uses and the potential to transform the financial industry.
But like any tool, they can be exploited by criminals too.
To combat this misuse, Europol calls for greater cooperation between law enforcement, regulators, and the crypto industry, primarily by developing strong anti-money laundering (AML) and counter-terrorist financing (CTF) measures, alongside supporting innovation.
In this way a balance between security and progress can be achieved.
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