Adding an internal communications service known as 'ChatMe', a cryptocurrency exchange (Huione Crypto) and US dollar-backed stablecoin ('USDH') suggests that Huione Guarantee wants to become a truly full-service, self-sustaining platform. . The website for USDH, the Elliptic researchers say, describes it as “not restricted” by regulators around the world and says it “avoids the usual freeze and transfer restrictions” that can be applied to other cryptocurrencies.
Research from Elliptic last year found that Huione Guarantee sellers had moved approximately $11 billion on the platform in the first three years of its existence. Less than a year later, researchers now estimate that cumulative total at $24 billion. The various extensions of the platform all contribute to the increase, but ultimately the escrow and transfer services form the core service.
“With the Huione guarantee, the main thing being sold is laundering the proceeds of online scams,” Robinson claims. “The vast majority of funds passing through the market involve vendors who openly offer money laundering services and talk about the types of fraud proceeds they are willing to accept.”
Meanwhile, as business booms, researchers say the platform's owner, Huione Group, has worked to downplay the association with the market and the connection between Huione Guarantee and other linked services, such as Huione Pay. The marketplace has even been renamed 'Haowang Garantie', although Huione Group confirmed to researchers that Huione Garantie is still a 'strategic partner and shareholder'.
“The Huione Guarantee 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 sums of cryptocurrencies at a significant discount. In comparison, competing platforms have lost a significant number of users. This is likely a result of the Chinese government's crackdown.”
Robinson says an initial analysis by Elliptic has shown that approximately $6 billion flows through a Telegram bot that is reportedly “used primarily for online gambling on Huione Guarantee.” The researchers' analysis suggests that this may also be linked to money laundering. Users deposit crypto into a wallet and can then move their balance to individual mini-games that exist in their own Telegram groups. However, the “games” are extremely rudimentary and don't seem to require any skill. Players also tend to bet consistently over very long periods of time, betting similar amounts and leaving precise intervals between their bets. All this “together indicates that there is automated gambling for the purpose of money laundering rather than entertainment,” Robinson claims.
Despite Huione Guarantee's apparent 'too big to fail' strategy, Elliptic researchers say the platform is far from completely self-sustaining. So far, Huione's stablecoin and cryptocurrency exchange has failed to record significant transaction volumes, Robinson says, despite some promotion within existing communication channels. While the market is driving the transition, continued dependence on third parties may still be a weakness – at least for now.
“Huione Guarantee is still dependent on certain centralized infrastructure, Tether and Telegram,” says Robinson. “I think there is now an opportunity to suppress it through those service providers. I think if we wait too long, there is a chance that they will move to their own infrastructure and that will be more challenging.”
