The report includes transactions between darknet and other types of entities, as well as unknown intermediate addresses (i.e., addresses that do not belong to any identified services.) This report represents both direct and indirect bitcoin transactions between clusters owned by darknet entities, as well as non-darknet and unidentified entities. The public nature of transactions on the blockchain, paired with these digital asset regulations, makes it even easier to identify suspicious activities through analytical tools like Crystal Blockchain. These regulations have significantly contributed to the identification of fund source “purity” and relationships to darknet entities such as gambling sites, illegal marketplaces, and more. Guidelines and regulations have been laid out by the Financial Actions Task Force (FATF) and the European Union (EU) for exchanges, online wallets, and other Virtual Asset Service Providers (VASPs) in order to prevent illicit activity involving cryptocurrencies. The immutability and transparency of the Bitcoin Blockchain enables us to identify suspicious activity on a global level, an effort that would be impossible with fiat payments. Other entity types are entities such as payment processors, gambling services, illegal services, miners, marketplaces, online wallets, ransom extortioners, scams, stolen coins, and/or others. Mixers are services for mixing cryptocurrency funds from different sources with other funds, in order to obscure the trail back to the original source.ĭarknet entities are entities that operate via the darknet and offer illegal services or goods in exchange for (mainly) cryptocurrency.
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This also encourages darknet services to cooperate and grow their revenue internally.Įxchanges with verification requirements are exchanges with mandatory Know Your Customer (KYC) procedures, that will not allow the withdrawal of cryptocurrency or fiat money without confirmation of identity.Įxchanges w/o verification requirements are exchanges that allow the withdrawal of cryptocurrency or fiat money without any mandatory KYC procedures. It is possible that darknet users are trying to hide their bitcoin flow inside of the darknet, avoiding detection of their activities. The share of bitcoin sent from one darknet entity to another also grew in Q1 2020.During that same period, the amount sent in bitcoin to exchanges that require verification was reduced – seeming to indicate a reduction in the use of cryptocurrency exchanges for criminal and darknet activities in favor of more anonymous services like mixers.
In Q1 2020, there was a rapid growth in the amount of bitcoin sent from darknet entities to mixers.
The mass adoption of bitcoin, as well as its ease of use and popularity, is a contributing factor as well. The amount of money being transferred by darknet entities is still growing, and they are continuing to use bitcoin as a medium of transport.
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