The addition of an internal communication service called “ChatMe”, a cryptocurrency exchange (Huione Crypto) and US dollar-backed stablecoin (“USDH”) shows that Huione Assurance is looking to become into a truly full-service, self-sufficient platform. Elliptic researchers say USDH's website describes it as “unrestricted” by regulators around the world and says it “avoids common freeze and transfer restrictions.” Applicable to other cryptocurrencies.
In its research last year, Elliptic found that during the first three years of operation, Huione Guaranteed sellers moved about 11 billion USD on the platform. Less than a year later, researchers now estimate the cumulative total at $24 billion. The platform's various expansions all contributed to the increase, but ultimately its escrow and transfer services remained the core offering.
“With Huione Guarantee, the primary purpose for sale is actually to launder proceeds from online scams,” Robinson alleges. “The majority of the money that is moving through the market is linked to vendors who are openly offering money laundering services, who talk about the fraudulent funds they are willing to accept.”
Meanwhile, as business boomed, researchers say the platform owner, Huione Group, tried to downplay its connection to the market and the connection between Huione Assurance and other services. Other linking services, like Huione Pay. The marketplace was even renamed “Haowang Assurance,” although Huione Group confirmed to researchers that Huione Assurance remains a “strategic partner and shareholder.”
“The Huione group on Telegram continues to be widely used, with more than 139,000 users,” said Jason Tower, country director for Myanmar at the United States Institute of Peace. “Telegram groups are used to move large amounts of cryptocurrency at significant discounts. By comparison, competing platforms have lost a significant number of users. This may be the result of suppress of the Chinese government.”
Robinson said initial analysis from Elliptic found about $6 billion transferred through a Telegram bot believed to be “primarily used for online gambling on Huione Assurance.” The researchers' analysis shows that this could also be linked to money laundering. Users deposit cryptocurrency into the wallet and can then transfer their balance into individual mini-games that exist within their own Telegram group. However, these “games” are extremely rudimentary and do not seem to involve any skill. Players also tend to bet consistently over very long periods of time, betting similar amounts and leaving precise intervals between their bets. Robinson alleges that all of this “taken together suggests automated gambling activity for the purpose of money laundering rather than entertainment.”
Despite Huione Guaranteed's too-big-to-fail strategy, Elliptic researchers say the platform is far from being completely self-sufficient. So far, Huione's stablecoin and cryptocurrency exchange has failed to register significant trading volumes, Robinson said, despite some advertising in its existing media channels. As the market works to accelerate the transition, continued reliance on third parties may still be a weakness—at least for now.
“Huione Assurance still depends on certain centralized infrastructure, Tether and Telegram,” Robinson said. “I think now there's an opportunity to prevent it through those service providers. “I think if we wait too long there's a chance they'll move to their own infrastructure and that becomes more difficult.”