Criminals are using XRP to carry out their illegal activities, even though they are almost identical to Bitcoin, according to a new report from Elliptic.
The $ 400 million worth of XRP can be traced back to a variety of Ponzi programs and activities at darknet, Elliptic said in a report published Wednesday. While all of this may sound like a lot, it only represents 0,2% of XRP transactions. By comparison, 829 million dollars, or 0,5% of network transactions, were spent on Dark web.
"Regardless of the amount, what it shows is that there is illegal activity with this currency," said Tom Robinson, chief scientist and co-founder of Elliptic. “So if you are a business handling some of these transactions then you need to check for this because you do not want to be the organization used to flush these income"
Such concerns are particularly acute for the target market of XRP, the regulated financial institutions. Ripple, the DLT start-up, which holds about 60% of the XRP offer and periodically sells tokens to fund operations, has introduced the bank software that XRP has been using in recent years.
A Ripple spokesman said: "Like other cryptocurrencies, XRP is open source and decentralized - available to anyone to use. Ripple allows XRP transactions to be secure. ”
Blockchain trading as Elliptic reports is usually used in markets drugs, weapons, child sex abuse material and ransomware-as-a-service. In the case of XRP, much of the trading involved Ponzi scams and programs, Robinson said.
For example, a large chunk was calculated by the Plus Token investment program. Earlier this year, Chinese authorities arrested six Chinese nationals on the island of Vanuatu, suspected of orchestrating the fraud, who collected billions in crypto from people on China and South Korea.
There has been an increase in the use of cryptocurrencies for the market for example stolen credit card numbers on the dark web and Elliptic had identified several of them websites that received XRP along with other cryptocurrencies.
However, Robinson said that the relatively small amount of illegal use of XRP may be due to its relationship with traditional funding, compared to other cryptocurrencies.
Ripple wanted to provide a cheap and effective encryption bridge to connect correspondent banks, thus providing almost immediate cross-border payments. Back in 2015, it was one of the first companies encryption received a fine from the Financial Crimes Enforcement Network (FinCEN) for AML's failures. But this was considered positive among a newcomer industry encryption because it meant Ripple was closer to regulation than other encryption companies at the time.
Another major investor in XRP is Japanese SBI Holdings (also known as Softbank Investment), which also led to a $ 23 million investment round at Elliptic earlier this year.
Tomoyuki Nii, an official overseas investment officer at SBI Investment, said in an interview that the bank was attracted to Elliptic because it was the best blockchain company for XRP.
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