How do criminal cryptocurrencies use?

How much use criminal digital assets?

companies that are involved in illegal activities received around $ 5 billion in digital asset funds in 2020 and transferred a similar amount. However, these sums of the blockchain data provider Chainalysis make up less than 1 percent of the total cryptocurrency flows and, according to UN estimates, are placed in the shade of $ 1.6 trillion in cash that are washed annually.

Nevertheless, the free -range, loosely regulated world of digital assets has acquired the call to facilitate crime because the system has not yet been checked in its early years. The network has narrowed because supervisory authorities and cryptocurrency companies develop tools to erase questionable activities. But the use of digital assets for crimes such as fraud and ransomware requirements remains.

Why do criminal digital assets use?

The charm of digital assets for criminals are that they offer different anonymity depending on asset. This enables you to become an instrument to facilitate money laundering, for example.

Bitcoin, the most popular, offers its owners pseudonymity. This means that owners can choose services for buying and selling cryptocurrency without having to disclose information that they can personally identify. However, every transaction is recorded in an unchangeable blockchain, so that those with the technical know-how can see which digital wallets send funds to others.

In contrast, Monero, a smaller cryptocurrency, was designed as an anonymous “privacy” Coin ”to obscure the identity of the transmitter and recipient as well as the exchanged amount. However, it is illiquid, which means that it can be difficult to buy large quantities and attract unwanted attention in criminal attention.

For which types of criminal activities are digital assets used?

According to Chainalysis, frauds make up the majority of criminal transactions with digital assets. Last year, for example, Hacker took over the Twitter accounts of hundreds of top-class users, including the then US presidential candidate Joe Biden and the electric car tycoon Elon Musk to request more than $ 100,000 in Bitcoin. "Duplication of all payments sent to my BTC address. They send $ 1,000 and I send $ 2,000 back!" wrote a fraudster of Musk account.

The second largest crime category are illegal transactions on the Dark Web, as Chainalysis data show. The Dark Web is the name for the popular parts of the Internet that are invisible to hackers and criminals, which are invisible to search engines and require anonymization software for access. They act as hubs for buying and selling firearms, drugs, stolen data and other illegal products.

Many only accept payments in digital assets. On Hydra, the largest Dark web marketplace according to sales, there is money launderers named "Treasure Men": A user pays a cryptocurrency amount to an intermediary who converts it into cash and leaves it at a pick-up point.

A smaller but rapidly growing criminal use of digital assets is to collect ransomware payments. Ransomware usually includes hackers that confiscate the data of a company or capture computer systems and only unlock access for a ransom. With the spread of practice, hackers have passed to demand ransom payments in Bitcoin or Monero, which makes it more difficult for law enforcement authorities to track down the money. In 2020, at least $ 350 million were paid to crypto soldering. Other criminal applications are terrorism financing, the circumvention of sanctions or the shift of stolen funds.

"I see the promise of these new technologies," said US finance minister Janet Yellen in February. "But I also see reality: cryptocurrencies were used to wash the profits of online drug dealers; they were an instrument for financing terrorism."

Are there any ways to stop this?

Regulatory printing has encouraged many cryptocurrency companies to improve their surveillance of shameful activities.

as digital assets started for the first time, criminals used the large cryptocurrency exchanges, many of which had little to no anti-money laundering (AML) or know-your-customer (KYC) processes. The blockchain analysis company Elliptic estimates that large stock exchanges have contributed between 60 and 80 percent of all Bitcoin transactions from well-known evil actors between 2011 and 2019. This proportion is now 45 percent because many crypto exchanges have improved their systems.

In September, the US Ministry of Finance for the first time imposed sanctions against a cryptocurrency exchange to facilitate ransomware payments. Further regulations or sanctions could be in preparation.

In the meantime, law enforcement agencies and the private sector technologies are developing in order to pursue criminal groups and their use of digital assets by analyzing the streams of cryptocurrencies in the blockchain. For example, the US authorities were able to pursue a large part of the ransomware payments to the Russian hackers, who had effectively shut down the colonial oil pipeline at the beginning of this year, and recovered, which led to fuel shortage on the US East coast.

The cat-and-mouse game escalates, however, because criminal groups develop techniques to blur their crypto traces.