[Parker] Nth room case sheds light on a 'digital new norm'
[Parker’s Crypto Story] The so-called “Nth room” case is at the center of controversy in Korean society. Cryptocurrency, a new method of accepting revenue was used in the incident. In the past, black money flowed in the form of fake bank accounts and fruit boxes of cash. The advent of cryptocurrency in the recent criminal case comes as creates a legal and regulatory grey zone, not to mention obscuring the issue. Nth room operators’ revenue model can be understood by tracing withdrawals and Cho Ju-bin’s cryptocurrency wallet. The Telegram trafficker has been found to use Monero to accept fees for entering the chat room. Depending on the type of the room, he received up to 1.5 million won worth of cryptocurrency. In the black market, the Monero-based transactions undergo a process called “mixing” to shuffle the coin with other digital coins to make it hard to trace the transactions. Cho allegedly tried to commit money laundering using the process. The Hankyoreh newspaper reported that he owns 2-300 million won in his Monero wallet. According to CoinDesk Korea, Cho has 3.2 billion won in his Ethereum wallet and 37 million won in his Bitcoin wallet. #Bitcoin is rather unsuitable for money laundering. One can ask why the trafficker was less reliant on bitcoin. Bitcoin can be traced, since the transparent decentralized system leaves records of transaction. Even with the mixing work, it can be traced by sorting out blacklists. #Monero is different But Monero is different. A user with knowledge of cryptocurrencies can commit money laundering. This poses a headache to the authorities in different countries. The Treasury Department's Office of Foreign Assets Control arrested two Chinese nationals for laundering over $100 million worth of cryptocurrency by hacking an exchange jointly with North Korean actors. Monero was used in this case. Europol admitted that Monero cannot be traced, calling it a great risk last December. We’ve consulted multiple security experts to ask if Monero can be traced, who said they either were not tracking Monero or did now know of any way to do so. #What if an expert causes a similar crime? The investigation of the latest case was able to identify accomplices after arresting Cho. But what if they obtained expertise in managing cryptocurrencies? That could make the pursuit of criminals trickier, with even well-resourced authorities face challenges in tracking Monero. To address the problem, the regulatory agencies should collaborate with the private sector as well as the public authorities. When they solidify the collaboration with private companies and the Know Your Customer identification system, the tracing could be easier. Second, the latest cast can’t be generalized. According to S2WLab, a data analysis company that clinched an agreement to cooperate with Interpol, “90 percent of the transactions on the dark web is via bitcoin, based on data compiled over the long periods of time. Because of the ability to exchange them with cash, most of the deals are done through bitcoin.”