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BKEX, a crypto exchange headquartered in the British Virgin Islands, announced on May 29 that the user funds in the platform were used for money laundering activity. The exchange has suspended withdrawals and stated it would continue cooperating with the police as the investigation progresses.
BKEX Cooperating With Police to Investigate the Issue
Digital asset and derivatives trading exchange BKEX said on Monday it is suspending withdrawals on its platform after revealing that some user funds were involved in money laundering activities. The trading firm said it is currently cooperating with law authorities to accumulate information and ensure the safety of its users.
“Recently, the platform users’ funds were involved in ‘money laundering’ and BKEX is currently cooperating with the police to collect evidence, for which we will suspend withdrawals to cooperate with the work.”
– BKEX wrote in the announcement.
BKEX added it would keep transparent and timely communication during the investigation and encouraged users to contact its customer service team if they experience any issues. The crypto exchange is doing everything possible “to restore the normal operation of the exchange,” it added.
Founded in 2018, BKEX is a crypto exchange based in the British Virgin Islands, an offshore jurisdiction known for its favorable business environment. The company offers various digital asset services on its platform, including spot trading, derivatives, mining, and P2P trading. The exchange currently offers support for more than 1,200 cryptocurrencies.
Money Laundering and Cryptocurrency
Over the years, Bitcoin and other cryptocurrencies have garnered considerable attention for their decentralized nature and benefits, such as convenience and transaction speed. However, these features have also made cryptocurrencies an attractive tool for illicit activities, particularly hacks and money laundering.
These risks were highlighted last year when the amount of stolen crypto funds peaked at $3.7 billion, according to a research report by TRM Labs. The report pointed out ten cryptocurrencies ‘mega hacks’ in 2022, accounting for almost 75% of the total.
Notably, the increase in hacks and money laundering attempts was helped by the emergence of various crypto-related instruments called mixers or tumblers, which, as their name suggests, mix up a certain amount of crypto funds in private pools before transferring it to their designated receivers.
The most popular crypto mixer is Tornado Cash, which was sanctioned last year by the US Treasury Department. The surge in illicit activities in the crypto space prompted regulators to crack down on the industry and design comprehensive regulatory frameworks to protect investors from such risks.
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