How to check the purity of bitcoin before making a deal

The question of checking cryptocurrency wallets usually arises after severe financial losses. So let’s figure out the danger of “dirty” assets, how to protect your wallet from them and check bitcoin for cleanliness.

What is the danger of “dirty” assets

You must understand that by accepting money from suspicious wallets, you risk your reputation at least. Also, sometimes after dubious transactions, you may receive a request from regulatory authorities. It threatens you with financial losses. After all, having received such assets, you most likely will not be able to use them in the future. Therefore, checking bitcoins for purity is of great importance.

Using special services to help figure out a dishonest counterparty is better. It will help keep only verified assets in your cryptocurrency wallet.

It’s like with paper banknotes – having received a bill, you are trying to determine by watermarks and other signs whether it is fake. Since the possibility of forgery is excluded in the case of crypto wallets, the algorithm checks whether criminals used the wallet.

What addresses and assets are called “dirty”

It can use blockchain technologies on the dark web. So cryptocurrency becomes a means of payment for selling drugs, weapons and fake documents, as well as financing other illegal activities. By making a deal with someone who took part in this criminal business, you somehow become an accomplice in crime. It is these virtual wallets and crypto assets that are called dirty. In this case, the cryptocurrency may hang with you as a “dead weight” since no one wants to deal with such a wallet.

It’s like checking a used car before buying. Before buying a car, the new owner wants to know if it is stolen and to get reliable information about its mileage and the owners in whose hands it has been.

Validation mechanism

Key concepts

• AML is an anti-fraud system. It can use in the banking sector and transactions with cryptocurrencies;
• KYC is part of the AML system, a set of tools for finding unreliable elements and reducing risks. Its essence is to identify the identity of the counterparty before conducting a financial transaction.

AMLBot is a cryptocurrency verification service

Many services allow you to insure against the troubles associated with “dirty” assets. With the help of an analytical algorithm, they track all the movements of investment: if it once passes through a risky address, you will know about it, no matter how long ago it happened.

The ability to check a bitcoin wallet for cleanliness is possible since all connections are recorded in public and private blockchain databases. A simple example: an exchange indicates a wallet on its website, or an exchange user goes through the KYC registration procedure. This information is of interest to the algorithm.

The concept of KYC appeared in 2016. It usually means you must take a photo with your passport, confirm your identity for the service, or perform other actions, such as verifying your identity via SMS.

The algorithm checks the sources and points to dubious subjects. How dangerous are marked:

• Services that are used on the dark web;
• Exchanges associated with fraud and illegal activities, as well as funds that the government has seized, for example, obtained by criminal means;
• Mixers are money laundering services.

How suspicious is marked:

• Exchangers and exchanges without KYC/AML registration;
• Coins received from a cryptocurrency ATM;
• Coins associated with casinos that do not have a license.

The algorithm also warns of the possible consequences of acquiring assets from exchanges that allow you to withdraw more than a thousand dollars in cryptocurrency daily without KYC/AML.

“If we are talking about the security of a crypto user, then accepting assets that interacted with Bitzlato is no riskier than with any other wallet. In such cases, you always need to be careful in the same way as when dealing with traditional finance.

Exchanges in exchanges without mandatory KYC can be risky. But this process represents a risk primarily for the state since it cannot control this process. For the investor, it does not matter whether he trades with a verified user or not.

Comment from Bitzlato CEO Mikhail Lunev:

• “It is only necessary to trade on trusted sites, beware of “too tempting” offers from new platforms and always follow the minimum rules of financial security. Bitzlato guarantees a secure exchange with any user, verified or not, and it has no impact on safety.”

AMLBot – a service for checking crypto wallets

AMLBot is one of the most popular services for checking a bitcoin wallet. According to the developers, it was created in 2019 and met all international requirements.

Abbreviation of AML (Anti-Money) Laundering means “anti-money laundering”. An example of AML in the cryptocurrency market is the KYC procedure.

AMLBot algorithm analyzes more than 10 thousand open sources and about 2.5 thousand spam addresses in real-time. To check the wallet, you need to register by mail.

How to use AMLBot for verification

The service allows you to study the movements of cryptocurrencies: ETH, BTC, LTC, BCH, TetherOMNI and XPR, and 1500 ERC-20 tokens (including Tether, BNB, QC, NEXO, TUSD, and 60 passes DeFi). In addition, on April 15, 2021, ETC&BSV were added to this list. To check assets, you must select the necessary coins in the list and enter the address or hash that you want to fit in a particular field.

Wallet verification via AMLBot

AMLBot finds the links of an address with different users on the blockchain, each with its own conditional risk. The overall risk score is the average of all found components. For example, if out of 2 BTC on the wallet being checked, 1 BTC came from mining (0% risk) and another 1 BTC from the Dark Web (100% risk), then the risk score is 50%.

Clean wallets gain no more than 25%, from 25 to 75% – the average level of risk. If the risk assessment exceeds 75%, it is not recommended to carry out any transactions – there are “dirty” assets in this wallet.

You can conduct an investigation that will point you to the sources of funds. In addition, it helps to understand the nature of the risk better. True, this feature is not available in the trial version; to use it, you need to pay a tariff.

Investigation with AMLbot

The investigation showed that it obtained some of the assets in the verified wallet from the dark market; they are marked as 100% risky.

The user is offered two free checks (the fee for the rest is from $0.3 to $2 depending on the amount deposited) and the possibility of creating an individual tariff and using promotional codes. 

Conclusion

Like any other financial instrument, cryptocurrency is sometimes used by dishonest users. Any transactions with such people threaten you with financial losses – your assets may hang with you as a “dead weight”. To protect your wallet and put only “clean” assets into it, you can use the AMLBot service. It allows you to check ETH, BTC, LTC, BCH, TetherOMNI and XPR, over 1500+ ERC-20 tokens, ETC and BSV.

Meanwhile, one must understand that there are other services for checking bitcoin. But, at the same time, each has distinctive features and unique characteristics.

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