Ripple's XRP used in $400M of crimes, a crypto-tracking firm says

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Elliptic, a company that monitors cryptocurrency transactions for signs of foul play, recently began watching XRP — the digital currency created, and mostly controlled by, Ripple.

In its analysis, Elliptic says it has found $400 million of crime that involved the use of XRP since the digital currency was formed. This is a relatively low number, as $198 billion of transactions have taken place using XRP since its inception. So crime represents 0.2% of XRP transactions. According to Elliptic, the amount of bitcoin transactions linked to illegal activity is 0.5%.

The types of misdeeds committed in the currencies are different, according to Tom Robinson, chief scientist and co-founder of Elliptic. Illegal activity in bitcoin is mostly people buying things like drugs and guns on the dark web, he says. Many dark web marketplaces accept bitcoin. The kinds of criminal activities people use XRP for are Ponzi schemes and other scams, Robinson said.

Like other cryptocurrency-monitoring services, including Chainalysis, Elliptic links digital currency addresses to real-world people and entities. It gives each transaction a risk score based on the owner of the associated account and the activity on that account. Besides XRP and bitcoin, Elliptic monitors ether, litecoin and tether. The crypto-friendly Silvergate Bank is a client.

Elliptic’s data analysts constantly scour the dark web for cryptocurrency usage. When a Ponzi scheme operator asks victims to make payment to certain accounts, Elliptic tracks that. It also follows stolen funds from cryptocurrency exchanges and monitors ransomware payments.

“XRP in general is associated with traditional finance to a much greater extent than bitcoin,” Robinson said. “And I think that's because Ripple is really touting it as a solution for cross-border payments for use by banks. So if you're a criminal, you're probably going to turn towards using something decentralized and neutral like bitcoin rather than something associated with traditional finance like XRP.”

Dark web marketplaces tend to not accept XRP because of its linkage with the traditional financial world, he said. But that does not necessarily mean XRP is a safer asset.

“With any open payment system, there is going to be some elicit usage,” Robinson said. “That's just the nature of it being open.”

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Digital currencies Bitcoin Cryptocurrencies Money laundering AML Financial crimes Fraud detection
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