How Criminals use Cryptocurrencies Illegally



Well-known member
Jun 17, 2018
What cryptocurrency features turned out to be advantageous to criminals. It is a known fact that cryptocurrencies open an affordable and decentralized path to the storage / laundering of money and the financing of criminal operations. Bitcoin and other altcoins can be used all over the world, without fear of centralized supervision (for example, by banks). It was a sin not to use such perfect tool.

Crypto currency was widely used in dark net long before it became the subject of interest of the rest of the society and large investors. At present, dozens of different cryptocurrencies circulate in the deep web. At the same time, the growth of popularity of cryptocurrencies coincided with the increase in terrorist activity. Both of these processes were closely related to each other.

Coins for ISIS
According to a 2016 ‘The use of crypto-currencies in funding violent jihad’, terrorists, in particular ISIS fighters, actively use cryptocurrencies in financing their activities.

“Although it is difficult to find concrete evidence of large-scale use of Bitcoins and other crypto-currencies by terrorist groups and their supporters, there is strong evidence to suggest that they have been linked to a number of terror attacks in Europe and Indonesia,” the study states.

How Criminals use Cryptocurrencies Illegally

Given the extremely high attention of law enforcement agencies to financial flows (especially during criminal investigations), it is not surprising that terrorists try to bypass control by the state through digital currencies and this trend is gaining momentum.

Some websites associated with terrorist organizations have started to collect donations in Bitcoins. Many Bitcoin ATMs and Bitcoin exchanges are located in countries that have seen significant numbers of foreign fighters join ISIS in the Middle East and are also positioned in countries that have seen increased risk of terror attack. These present a significant risk because they allow for the seamless, anonymous transfer of funds to and from terrorist groups and their supporters.”

The study focuses on bitcoin — probably because it makes up the greater of transactions; However, there are other cryptocurrencies which are actually favoured by people engaged in illegal activities.

the Dark Web

The Recorded Future research group recently published a report on the most common digital currencies used for illegal or unregulated activity on the dark web. According to the report, while bitcoin is still the most common accepted payment method, most of the dark web users actually use other cryptocurrencies.

According to the results of a survey conducted on prominent dark web hacking forum, Monero is the most favored coin among hackers.
Since its launch in 2014, Monero has positioned itself as the most anonymous and secure crypto currency. It has repeatedly proven its resilience to authorities attempts to unravel who is hiding behind the parties in the transactions.

How Criminals use Cryptocurrencies Illegally
Dash is a little behind Monero, in second place. This crypto payment platform gains popularity for its ease of use and low fees.

In addition to problems with confidentiality when buying goods in a dark web, the high cost of bitcoin transactions is an important reason for bitcoin’s decline in popularity. Bitcoin transaction fees make the first crypto currency completely unsuitable for micro-payments.

As you can see from the diagram, there is a significant gap between the digital currencies preferred by criminals and the cryptocurrencies that providers accept. Thus, 100% of dark web suppliers accept bitcoins.

How Criminals use Cryptocurrencies Illegally

The second place is occupied by Litecoin, accepted by 30% of suppliers. Dash comes in at a close third with 20%, while the while the criminal’s favourite, Monero, only finds use on around 6% of dark web services.

It should be noted that there is difference between Eastern-European and English-speaking regions with Litecoin and Monero being favoured by those two groups respectively.

The study quotes a prominent Russian hacker on one of the forums they surveyed:

“Do not reinvent the wheel — just look where Bitcoin came from. It came from the darknet, and now U.S members are gradually migrating to Dash, while those in Europe have moved to Monero. As a rule, whatever [currency] is used by the drug dealers will become a mainstream currency, and they have been actively switching to Dash. There are not so many carders are there are junkies.”

The point is not whether the problem really exists, but whether the crypto community plans to do to eliminate it. There have already been cases when platforms refused to interfere with their code even after a massive hacking. Such devotion to cryptocurrency ideals is one of the strengths of the community, but it also opens up new opportunities for criminals.
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