The addition of an internal communication service known as “ChatMe”, a cryptocurrency exchange (Huione Crypto) and a US dollar-backed stablecoin (“USDH”) suggests that Huione Guarantee wants to become a self-sufficient platform that will truly provide a full service. The website for USDH, the Elliptic researchers say, describes it as “unrestricted” by regulators around the world and says it “avoids the usual freeze and transfer restrictions” that may apply to other cryptocurrencies.
In its work last year, Elliptic found that in its first three years of operation, Huione Guarantee sellers was around 11 billion dollars on the platform. Less than a year later, researchers now estimate the cumulative amount to be $24 billion. All the different extensions of the platform contribute to the increase, but ultimately the deposit and transfer services are the core service.
“With Huione Guarantee, the primary thing being sold is actually laundering the proceeds of online fraud,” Robinson claims. “The vast majority of funds passing through the market are associated with vendors who openly offer money laundering services that speak to the types of fraudulent proceeds they are willing to accept.”
Meanwhile, as the business grows, researchers say the platform’s owner, Huione Group, has worked to downplay its connection to the market and the link between Huione Guarantee and other related services, such as Huione Pay. The marketplace has even been rebranded as “Haowang Guarantee,” although Huione Group confirmed to researchers that Huione Guarantee is still a “strategic partner and shareholder.”
“The Huione Guarantee Group on Telegram remains heavily used, with more than 139,000 users,” said Jason Tower, country director for Myanmar at the US Institute of Peace. “Telegram groups are used to transfer large amounts of cryptocurrency at a significant discount. In comparison, competing platforms have lost a significant number of users. This is probably the result crushing by the Chinese government.”
Robinson says that initial analysis by Elliptic found that about $6 billion is flowing through a single Telegram bot that is allegedly “primarily used for online gambling on Huione Guarantee.” The researchers’ analysis suggests that this may also be allegedly related to money laundering. Users deposit cryptocurrencies into a wallet and can then move their balance to individual mini-games that exist in their own Telegram groups. The “games” are however extremely rudimentary and seem to involve no skill whatsoever. Players also tend to bet consistently over very long periods of time, bet similar amounts and leave precise intervals between their bets. All this “combined to suggest automated gambling for the purpose of money laundering, not entertainment,” according to Robinson.
Despite Huione Guarantee’s apparent too-big-to-fail strategy, Elliptic researchers say the platform is far from fully self-sufficient. So far, Huione’s stablecoin and cryptocurrency exchange has failed to register significant transaction volumes, Robinson says, despite some promotion within its existing communication channels. While the market is working to drive the transition, its continued reliance on third parties could still be a weakness — at least for now.
“The Huione Guarantee still depends on certain centralized infrastructure, Tether and Telegram,” says Robinson. “I think there’s an opportunity now to combat that through those service providers. I think if we wait too long, then there’s a chance they’ll move to their own infrastructure and that becomes more of a challenge.”