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ECOWAS Parliament enlightened on Dangers of Cryptocurrency and it's Mitigations

While presenting a paper titled "Dangers of Cryptocurrencies, how can they be mitigated?"at the delocalised meeting of the Joint Committee on Administration, Finance and Budget, Macroeconomic Policy & Economic Research, Public Account, Trade, Custom & Free Movement in Ouagadougou, Burkina Faso, Mr. Olusegun Akinyelu, a Cryptocurrency writer highlighted the dangers of Cryptocurrencies and how to mitigate them. He revealed that chain analysis, a highly reputable and global blockchain analytics firm, in their 2021 publication, highlighted six dangers of Cryptocurrencies, which include: Money Laundering, Ransomeware, Scams, Stolen Funds, Terrorism, and Extremism Financing. According to Akinyelu, money laundering, the act of concealing transactions to hide the origin of illicit money from authorities is the key to Cryptocurrency hate-crimes. His words: "This is the new haven for cybercriminals who steal Cryptocurrencies or accept them as payment for illicit goods. Criminals rely on a small group of service providers that specialize in money laundering services to liquidate their Crypto assets, while others turn large Cryptocurrency services and Money-Service businesses (MSBs) that have to follow low or non-existing compliance measures. According to chain analysis, most of these money-laundering service providers include high-risk exchanges that could be mainstream mixers, gambling platforms, or services headquartered in high-risk jurisdictions". On Ransomware, he revealed that this is a type of malicious software that is designed to block the original owners from having access to a computer system until a sum of money is paid. He further noted that this is a Cryptocurrency crime that saw an exponential increase in adoption in 2020, just as Covid-19 hits on a global scale. According to the analyst, Blockchain analysis by Chainanalysis shows that the total amount paid by Ransomware victims increased by 311% in 2020, to almost $350 million worth of Cryptocurrency, which is still an approximation. He also maintained that a large portion of funds taken from victim is moved to mainstream exchange, high-risk exchanges, and mixers. Another risk factor identified by the presenter is Darknet Markets. He said that there's another side to the internet thats' not popular among everyday internet users, known as the Dark Web. He stated that this section of the internet also has a black market, known as the darknet market where illicit goods such as drugs, stolen information, and weapons are up for sale and more common compared to legal items. Cryptocurrencies are a common method of payments in these markets. He also noted that 2021 blockchain research by chainanalysis, show that darknet markets set a new record in 2020, bringing in a total of $1.7 billion worth of Cryptocurrency. Another danger associated with Cryptocurrency by the paper presenter is Terrorism and Terrorism Financing. He said that in 2020, government agencies around the world uncovered, investigated, and prosecuted more Terrorism Financing Schemes involving Cryptocurrency than ever before. He said: "The most notable example came in August when the United States Department of Justice (DOJ) announced the largest ever seizure of Cryptocurrency from a terrorist group. Following an investigation into several different Cryptocurrency donation campaigns, US government agencies recovered more than $1million worth of Bitcoin from wallets controlled by terrorist groups and their financial facilitators". Other Societal risks associated with Cryptocurrencies include Investment risk, Scams, phishing Scams, DeFi Scams, and Stolen Funds. According to Mr. Akinyelu, Cryptocurrency industry evolves with an increase in global institutional adoption. Again, he noted that bad actors who commit crypto related crimes in the space are not relenting either.The fact, he stated is that they seem to be having a head start, as chain analysis 2020 prediction shows that DeFi will play a huge role in cryptocrime in 2021. Some of the ways to mitigate this danger of Cryptocurrencies include Cryptocurrency Education, whereby the ledger phishing scam reinforces the importance for crypto exchanges to educate customers on the latest phishing techniques, especially if they know customers emails or other personal information has been compromised, which could expose customers to phishing attacks. "Governments of nations in West Africa region could also make it a point of duty to employ the services of Cryptocurrency, Blockchain, and Cybersecurity experts in the industry to periodically educate and sensitize the public on the dangers/risks with the Cryptocurrency space", he added. He also stated that one other important mitigating factor of these dangers is Law Enforcement and compliance professionals. For instance, although the chainanalysis research shows that the highlighted cryptocrimes are not as prevalent in West Africa compared to other parts of Africa, the West African region should empower law enforcement and compliance professionals within the region with the necessary Cryptocurrency blockchain and cyber security tools and training required to effectively perform their duties. This way, he noted, cryptocriminals can't simply send their ill-gotten Cryptocurrency to Crypto exchanges and cash out as a normal user would. Another mitigating factor is to enforce strict compliance on Cryptocurrency exchange in West Africa. For instance, governments in West Africa can start by first embracing centralized crypto exchange and enforce strict KYC ( Know Your Customer), KYT (Know Your Transaction), and AML (Anti-Money Laundering) compliance that can be used to track down bad actors in the region, via social engineering and blockchain analysis. Investigators could also significantly damage cybercriminals ability to convert Cryptocurrency into cash by going after these money laundering service providers, thereby reducing the incentive for cybercriminals to use Cryptocurrency in the first place. Another mitigating factor is mitigating DeFi Risks. For this, DeFi platforms never take possession of a user's fund, but instead simply route them between user's wallets based on the conditions outlined in the underlying smart contracts without human intervention. Unlike centralised Cryptocurrency exchanges that take custody of user's funds and are subject of regulations, it is almost impossible to regulate DeFi platform.

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