If you are reading this article as a drug lord or as an arms trafficker looking to launder your money, you are in luck. There is a new way of laundering money via Bitcoin (right now) with the help of Exclusive mining.
But how exactly does this work?
First of all you need to hire a miner. You must grant this miner the exclusive right to earn crypto as a reward for confirming a specific transaction. This transaction will be placed by you through a private channel. It's exactly like a regular transaction but there is only one exclusive miner to benefit from it.
Exclusive mining is really useful, helping investors avoid the danger of extreme situations and volatile fees. It also protects users from frontrunning traps. Frontrunning involves replicating or countering an unconfirmed transaction with another transaction and ensuring that the latter is executed first, usually by offering a higher transaction fee to miners.
Let's assume that you have some millions of dollars that you want to launder. The first step is to send some of your dirty Bitcoins to this exclusive miner we mentioned above. Your miner will charge an astronomical fee for this transaction. The miner will take this huge payment he received to a cryptocurrency exchange. Everything till now is legal because it's earned from mining right? When the miner exchanges the crypto, he/she will return it back to you. No loose ends, no money trailing and a really clever way to launder.
According to the CEO of blockchain investigations, Rich Sanders, this laundering method is very sophisticated and it's really hard to deal with. If the miner knows what he is doing it will be really easy to launder that money without raising suspicion. Private channels are easily kept secret and there is no public record of when or how a node became aware of transactions.
Elias Strehle stated that the only way to discover this type of laundering is by its patterns. If you manage to detect the laundering patterns of certain mining activities, you will probably have enough evidence to investigate further into those transactions. However, it is really hard to define what a suspicious transaction is, therefore making that type of crypto-laundering really effective.
However, we can not stop exclusive mining. As we mentioned above it has many legal applications and it is really useful for some people. What the crypto-concerned authorities must do is develop ways and tricks to counter these laundering events. A great way to counter it (danger of mathematics!) can be found here.
Thanks for reading! Let me know in the comments about any errors or inconsistencies you may find. Feedback is greatly appreciated.