Cryptocurrency and Carding: The Cash-Out Chain in the Blockchain Age (How New Technologies Are Changing the Laundering of Stolen Funds)

[Professor]

Introduction: From Physical Cash to Digital Trace
The classic problem with carding has always been the final, riskiest act — cashout. Physical withdrawals through droppers created a vulnerable "meat" chain with cameras, couriers, and direct contact. Cryptocurrencies, created as a tool for decentralization and freedom, have become the ideal solution for carders to launder and withdraw funds remotely, transforming the entire financial logistics of the crime.

Chapter 1: Why Cryptocurrency? A Criminal Product-Market Fit​

Cryptoassets have proven to be a near-perfect tool for money laundering based on five key parameters:

1. Pseudo-anonymity: No passport is required for transactions, only the wallet number (public key). The connection between the wallet and the identity is unclear.
2. Speed and global reach: Transfer millions of dollars to anywhere in the world in minutes, without intermediary banks or questions about the origin of funds.
3. Self-custodial (non-custodial): Complete control over assets without the risk of account blocking by a bank or payment system.
4. Difficulty of Confiscation: When properly organized, recovering stolen goods from criminals becomes an extremely difficult task for law enforcement.
5. Diversity of tools: Relatively legal crypto exchanges, decentralized services (DeFi), mixers, and proprietary "dirty" exchangers.

Chapter 2: The Standard Laundering Chain​

Converting stolen dollars from a card into "clean" assets is a multi-stage process, similar to filtration.

Stage 0: Obtaining liquidity.
The criminal already has digital dollars in an online store account, payment aggregator, or e-wallet balance (PayPal, Skrill), funded with stolen cards. Cryptocurrency helps with the next step.

Stage 1: Entering the crypto system (on-ramp).
It's necessary to buy crypto using "dirty" fiat money. This is the most dangerous stage, as it involves contact with regulated services (KYC - Know Your Customer). The following are used:

• P2P platforms (LocalBitcoins, Binance P2P, Telegram chats): Direct transactions with a counterparty. The carder transfers fiat from a stolen card or controlled account, and the counterparty sends crypto to a specified wallet. Dropper accounts or mules are often used .
• Crypto debit/credit cards: Cards temporarily linked to a crypto wallet that allow you to spend cryptocurrency directly. These cards can be used to quickly make online purchases.
• Illegal exchangers and OTC desks: Specialized services on the darknet that knowingly deal in illegal funds for high commissions (15-30%).

Stage 2: Mixing/Tumbling.
A direct transfer from the exchange to the final wallet leaves a public and transparent trail on the blockchain. To break this trail, use:

• Crypto mixers (CoinJoin services, such as Wasabi Wallet and Samourai): Combine coins from multiple users into a single transaction and then send them to new addresses, severing the direct connection between the sender and recipient.
• Transfer chains: Fast transfers between dozens of your own wallets across different blockchains.
• Exchange for private coins (Monero - XMR, Zcash - ZEC): Convert Bitcoin or Ethereum to Monero, where the blockchain hides the sender, recipient, and amount by default. You can then convert back to Bitcoin—the connection will be virtually untraceable.
• DeFi pools and cross-chain bridges: Using decentralized finance to provide liquidity and transfer assets between different blockchains (e.g., from Ethereum to Polygon or Binance Smart Chain).

Stage 3: Final – withdrawal to "pure" fiat (Off-ramp).
Once the trail is sufficiently entangled, it's time to convert the crypto back into regular money for spending.

• Regulated exchanges with liberal KYC: Using exchanges in jurisdictions with lax regulation. This is often done by creating shell companies or using dropper/mule documents.
• Cryptocards: Withdrawal via cards linked to a laundered wallet.
• Purchasing high-value liquid assets: Cryptocurrency is used to purchase digital art (NFTs), virtual land, in-game items, or even premium accounts, which are then resold for fiat.
• Offline Crypto Cashouts: Meet an OTC exchange in real life to withdraw cash.

Chapter 3: Emerging Threats: DeFi, NFTs, and Gamification​

The blockchain ecosystem has given rise to unique schemes:

1. DeFi as a giant mixer: Scammers exploit decentralized protocols for "vampire attacks" — rapidly providing and withdrawing liquidity, and swapping through multiple pools to disguise origin.
2. NFT for laundering: A "wash trading" scheme. The carder creates an NFT from another, "washed" wallet and purchases it from themselves for a large sum of crypto. On the blockchain, this appears as a legitimate sale of digital art, and the criminal receives "clean" income from their "creation."
3. Gaming and Virtual Worlds (Metaverse): Purchasing in-game currency, rare items, or virtual land with "dirty" crypto and then reselling it for fiat.

Chapter 4: Industry and Law Enforcement Responses: The Battle for Transparency​

The counteraction is not standing still. A new discipline has emerged: cryptoforensics and blockchain analysis .

• Blockchain analytics (Chainalysis, CipherTrace): Specialized companies create tools that, with a high degree of certainty, deanonymize mixed transactions, cluster wallets, and identify connections to known criminal pools.
• KYC/AML on crypto exchanges: Leading exchanges strictly require verification and monitor suspicious transactions, freezing funds if they are suspected.
• Regulatory pressure: The Financial Action Task Force (FATF) is implementing the Travel Rule, which requires the disclosure of sender and recipient information for crypto transfers.
• Behavioral pattern analysis: Tracking actions that are not typical for the average user: instant mixing, use of certain tools (Tornado Cash mixers, which were sanctioned in the US), sudden exchanges for private coins.

The weak point of the new system: P2P platforms and OTC transactions remain, where control is difficult. However, here, "meat" logistics come into play again — withdrawing large sums into cash still requires trusted individuals and physical meetings.

Conclusion: The endless evolution
of cryptocurrency has not eliminated the risks for carders, but rather transformed them. The risk of a dropper's physical arrest has been replaced by the risk of a digital investigation and the cognitive burden of managing a complex chain of transfers.

Now we are witnessing hybridization: old methods (droppers for P2P transactions) serve as an entry point to a new digital money laundering system. This is a symbiosis of the "analog" and "digital" criminal worlds.

The bottom line: blockchain, being transparent, has become a battlefield for intelligence. Carders use its complexity to conceal themselves, while law enforcement and analysts use this same transparency to track them. The winner of this race will be the one who masters the technology better and can predict the opponent's next move in this unprecedentedly complex financial chess game.