Adding an internal communication service known as “ChatMe”, a cryptocurrency exchange (Huione Crypto) and US dollar-backed stablecoin (“USDH”) suggests that Huione Guarantee is looking to become a truly full-service, self-sufficient platform. The website for USDH, the Elliptical researchers say, describes it as “not restricted” by regulators around the world and says it “avoids the common freeze and transfer restrictions” that can be applied to other cryptocurrencies.
In its work last year, Elliptic found that in the first three years of its operation, Huione Guarantee sellers moved about $11 billion on the platform. Less than a year later, researchers now estimate the total to be $24 billion. The platform’s various extensions all contribute to the increase, but ultimately its escrow 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 the funds that go through the market are in relation to suppliers who openly offer money laundering services, who talk about the types of fraudulent proceeds that they are willing to accept.”
Meanwhile, researchers say as the business booms, the platform’s owner, Huione Group, has worked to downplay its association with the marketplace and the link between Huione Guarantee and other connected services, such as Huione Pay. The marketplace has even been renamed “Haowang Guarantee,” although Huione Group confirmed to the researchers that Huione Guarantee is still a “strategic partner and shareholder.”
“Huione Guarantee Group on Telegram continues to be widely used with over 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 cryptocurrency at a significant discount. In comparison, competing platforms have lost a significant number of users. This is likely a result of repression by the Chinese government.”
Robinson says an initial analysis by Elliptic has found about $6 billion passing through a Telegram bot allegedly “used primarily for online gambling on Huione Guarantee.” The researchers’ analysis suggests that this may also allegedly be linked to money laundering. Users deposit crypto into a wallet and can then move their balance to individual mini-games found in their own Telegram groups. However, the “games” are extremely rudimentary and do not seem to involve any skill. Players also tend to bet consistently over very long periods of time, bet similar amounts and leave precise intervals between their bets. All of this “takes together to suggest automated gambling for the purpose of money laundering rather than entertainment,” Robinson argues.
Despite Huione Guarantee’s apparent too-big-to-fail strategy, the Elliptic researchers say the platform is far from completely self-sufficient. So far, Huione’s stablecoin and cryptocurrency exchange has not recorded significant volumes of transactions, Robinson says, despite some promotion within its existing communication channels. As the marketplace works to push the transition, its continued reliance on third parties may still be a weakness — at least for now.
“The Huione guarantee still relies on certain centralized infrastructures, Tether and Telegram,” says Robinson. “I think there’s an opportunity now to suppress that through these 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 challenging.”