The emergence of cryptocurrencies revolutionized the crime world. Cryptocurrencies give criminals an opportunity to commit crimes while keeping their identities hidden.
Crimes associated with cryptocurrencies include dark web illegal trades, cybercrime and money laundering.
Trends in crypto-related crimes are mainly tied to the growth in the use of altcoins in place of Bitcoin as the demand for anonymity increases.
The Dark Web Illegal Trades
The dark web hosts darknet markets that are created to enable people to purchase or sell goods and services that are illegal. Naturally, the fact that the transactions carried out are illegal means the buyers and sellers strive to keep their identities hidden. The first step is by ensuring the means of payment used does not disclose one’s identity, leading to the use of cryptocurrencies as they provide anonymity.
Bitcoin has been the cryptocurrency of choice for a majority of dark web users for a very long time. But the preference for Bitcoin by dark web users seems to be fading. This can be attributed to two main reasons:
The first reason is the fact that it is possible to trace a particular transaction in the BTC blockchain. A proper follow up of transacted coins through the blockchain can lead to the exposure of users’ identities, meaning the purpose of using the coins is defeated.
The other reason for the declined use of Bitcoin is the prolonged transaction time and high transaction costs associated with extended confirmation periods and higher charges by coin miners. The long transaction time has led to unnecessary delays in making payments, which means it will take longer for buyers to acquire their ordered goods or services. Higher transaction costs generally discourage users as it is an economic burden to pay more for a bolted system.
These inefficiencies associated with BTC have resulted in the introduction of more secure and faster cryptocurrencies, such as Moreno, in some of the markets.
Within the last year, some of the most popular darknet markets have integrated support for payments using altcoins like Bitcoin Cash, as is the case for Dream Market. Other markets like Libertas, which only accepts Monero, have abandoned Bitcoin entirely.
Cybercriminals are the other beneficiaries of the anonymity associated with cryptocurrencies.
Virtual currencies are making it possible for cybercriminals to launch ransomware campaigns and demand payments in Bitcoin so as to release the decrypted information or allow access that was previously denied. Most cybercriminals are turning to the use of more anonymous cryptocurrencies such as Dash and Monero. In one instance, a ransomware going as GandCrab demanded ransom exclusively in Dash.
Cybercriminals have also turned to using malware to mine cryptocurrencies. Here, criminals distribute malware that is set to mine specific cryptocurrencies without the knowledge of machine owners.
Money laundering is one other crime highly dependent on anonymity. Money launders try to use Bitcoin to hide their ill-gotten fortunes and avoid being traced.
BTC has, however, proved to be a weak tool for money laundering as the coins can easily be traced to the owner on close monitoring of the blockchain.
To avoid capture, criminals tend to use mixers that make it hard to trace the origin of coins. Another way of successfully laundering money using BTC is by using gambling sites, where the coins get mixed up and the money launderer can claim the Bitcoins were as a result of a gambling win.
The use of cryptocurrencies in money laundering has seen law enforcement agencies in many countries try as many means as possible to regulate the use of cryptocurrencies.
Terrorist Groups Use Bitcoin for Fundraising
Reports have surfaced that global terrorist groups are now on the dark web, raising money via virtual currency.
Concerns have also been tabled that the known ISIS and ISIL might be making use of Bitcoin and other underground cryptocurrencies which allow anonymous transactions and money laundering. One Singapore-based intelligence firm uncovered evidence that a terror cell alleged to be related to ISIS and operating in America is requesting for Bitcoin in its fundraising effort.
The fact that cryptocurrencies can be hidden away in digital wallets make them hard to steal, but as usual, criminals have devised new ways in which they are able to nab cryptocurrencies from their legitimate owners.
Criminals have been able to steal cryptocurrency funds stored in online wallets mainly through hacking, as was the case recently when $530 million worth of NEM coins was stolen from the users of Coincheck, a crypto exchange operator.
Cryptocurrency theft has seen a change in strategy as criminals also turn to physical attacks on crypto owners. Here, the criminals may hold the asset holders hostage and demand that they send them the funds for release. In other cases, crypto owners are mugged and forced to transfer their coins to the criminals’ accounts.
This type of theft is hard to stop as it is impossible to reverse the transactions once the coins are sent.
Generally, crypto-related crimes are moving towards attaining more anonymity as law enforcement strives to ensure the anonymity is reduced as much as possible and transparency in the crypto world acquired.
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