Bitcoin is still popular on the darknet
Users have learned to bypass prohibitions using mixers
FATF initiatives to help prevent the use of military-technical cooperation on the darknet
International consortium of news organizations developing transparency standards.
Bitcoin is one of the most popular payment methods on the darknet, according to an analytical report released by Crystal. But now black market users have learned to cover their tracks and use special mixers to hide the purchase of unlicensed or prohibited items..
Targeting dark web users just got harder
The data presented in the report suggests that bitcoin is still actively used in the darknet space. Despite the fact that the number of transferred bitcoins in the first quarter of 2020 decreased by 22% compared to 2017 and 47 thousand BTC, the value of the transferred money in dollar terms increased significantly and to $ 411 million.
For comparison: in 2019 this figure was $ 384 million.
There are several reasons for the growth: the increase in the value of bitcoin itself, the expansion of the darknet market, and the presence of mechanisms that allow you to hide transactions from third-party audits.
To do this, black market users use special mixer services that do not allow tracing a specific transaction..
Also, in the first quarter of this year, the flow of bitcoins from decentralized exchanges, which do not require their users to go through the KYC procedure, decreased and decreased to only 45% against 62% last year. However, bitcoin receipts from centralized exchanges, which require the KYC procedure, have increased. Growth was 7% – 29% in 2020 compared to 22% in 2019.
The share of bitcoins sent from one darknet entity to another (i.e. all transactions between various darknet entities) also increased from 10% in Q1 2019 to 19% in Q1 2020, indicating an overall increase in revenue and collaboration on the darknet.
This increase in share may also indicate that darknet users are trying to hide their bitcoin flow within the darknet itself, avoiding the risk of disclosing their activities by entities (such as exchanges) that have implemented the FATF requirements..
The main trend in the darknet market is the rise of mixers.
“In the first quarter of 2019, only 1% of bitcoins were sent to such services – in the first quarter of 2020, it grew to 20%. For comparison, the share of bitcoins sent to exchanges with verification requirements fell from 24% in Q1 2019 to 13% in Q1 2020. This is likely a response to the strengthening of regulatory and verification processes for exchanges, which leads to the fact that the owners of bitcoins on the darknet begin to hide other services, the source of their coins, “the report says..
The number of bitcoins received by darknet entities from mixing services has also tripled: from 106 bitcoins in Q1 2019 to 288 bitcoins in Q1 2020. This corresponds to a significant increase in the dollars received from these services – about US $ 2 million in Q1 2020 compared to the same period in Q1 2019 (approximately US $ 400,000).
The report says company employees are worried about the growing activity of darknet users, which harms the image of cryptocurrencies in the world. However, the introduction of strict measures for the circulation of bitcoins on the network, which were developed by the FATF employees, will reduce the rate of use of MTC on the darknet..
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