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Cryptocurrency In The System Of Money Laundering

Author

Listed:
  • Valeriia Dyntu

    (National University "Odessa Law Academy", Ukraine)

  • Oleh Dykyi

    (National University "Odessa Law Academy", Ukraine)

Abstract

The target of the article is to study the place of the cryptocurrency in the process of money laundering. The subject of the article is to investigate the ways and means of usage cryptocurrency for money laundering, the possibilities, and limits. Problem's setting. The authors of the paper have emphasized that despite the broad usage of cryptocurrency all over the world for different kinds of purchasing and transactions, there is no unified position regarding the definition of cryptocurrency, as well as its legal status. Moreover, the aforementioned circumstances trigger the difficulties during the criminal investigation of money laundering by using cryptocurrency. Thus, law informant agencies are facing challenges with the identification of criminals' personality and the fact of crime commitment. In addition, in the article, the authors articulate the main concept of cryptocurrency: anonymity and decentralization, which engender the main aggro while crime investigation. Methodology. The research is based on an analysis of historical stages of cryptocurrency creation: from Friedrich August von Hayek's idea of "currency independent from banking and governmental" to the establishment of decentralized currency. Moreover, there were analysed the cases of money laundering where criminals who used cryptocurrency have been identified and press charged. In addition, the comparative methods were used to collate different positions regarding cryptocurrency all over the world and inside Ukraine. The position of the main authorities and organizations regarding the legal status of cryptocurrency was investigated as well. The results of the study revealed that a cryptocurrency is a convenient tool for money laundering because it gives relative anonymity for the owner of the currency, as far as it does not require any personal information about the user and his location. Aforementioned feature minimizes the opportunity for law enforcement agencies to track back the criminal activity and to identify the criminal personality. Furthermore, cryptocurrency transactions are out of the government control because for conducting any transactions by using cryptocurrency, there is no need for their verification by third parties like a bank, governmental authority or nongovernmental organizations. In addition, the user can have more than one account and conduct transactions from different places at the same time.

Suggested Citation

  • Valeriia Dyntu & Oleh Dykyi, 2018. "Cryptocurrency In The System Of Money Laundering," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(5).
    • Handle: RePEc:bal:journl:2256-0742:2018:4:5:13
    DOI: 10.30525/2256-0742/2018-4-5-75-81
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    References listed on IDEAS

    as
    1. Wilko Bolt & Maarten R.C. Van Oordt, 2020. "On the Value of Virtual Currencies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(4), pages 835-862, June.
    2. Michel Rauchs & Garrick Hileman, 2017. "Global Cryptocurrency Benchmarking Study," Cambridge Centre for Alternative Finance Reports 201704-gcbs, Cambridge Centre for Alternative Finance, Cambridge Judge Business School, University of Cambridge.
    3. Wilko Bolt & Maarten R.C. Van Oordt, 2020. "On the Value of Virtual Currencies," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(4), pages 835-862, June.
    4. Oleksii Drozd & Oleg Basai & Hanna Churpita, 2018. "The Specificities Of Using Cryptocurrency In Purchase And Sale Contracts," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(2).
    5. Mykola Inshyn & Leonid Mohilevskyi & Oleksii Drozd, 2018. "The Issue Of Cryptocurrency Legal Regulation In Ukraine And All Over The World: A Comparative Analysis," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(1).
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Ahmet Faruk Aysan & Nawaz Farrukh, 2021. "China's Transition to a Digital Currency: Does It Threaten Dollarization?," Working Papers hal-03364939, HAL.

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    More about this item

    Keywords

    cryptocurrency; money laundering; criminal investigation;
    All these keywords.

    JEL classification:

    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law
    • K24 - Law and Economics - - Regulation and Business Law - - - Cyber Law
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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