A fascinating report has been released detailing how the bad guys are using cryptocurrency for crime. That is, Bitcoin ain’t cool anymore. The report covers bribery, money laundering, murder and all the other nefarious stuff in between. We read it all so you don’t have to. Here is the condensed version.
Crims will be crims, and they are always on the lookout for new ways to do illicit things. And it seems that the lawbreakers have started to move away from Bitcoin while living their best lives of crime.
According to a new report on crypto crime, freshly released by TRM Labs, there has been a shift in the cryptocurrency landscape when it comes to baddies. They are moving away from Bitcoin’s dominance and embracing a new era of multiple interconnected blockchains.
These wrongdoers are increasingly chain-hopping, which means that funds are moved through various blockchain networks. This makes the transactions a huge job to trace and keep up with for authorities, muddying the origins and destinations of illicit assets.
According to the report, Bitcoin’s use in illicit activities used to be at 97% in 2016. However, just 19% of illicit transactions were made with Bitcoin in 2022.
In terms of crypto that is hacked from exchanges, Bitcoin’s dominance is no longer, dropping to 3% in 2022. Ethereum has taken Bitcoin’s place (68%) and Binance Smart Chain (19%) is also attractive to crims trying to steal crypto.
Child Sexual Abuse and Exploitation Material (CSAM)
Probably the best news to come out of this report is that paedophiles are being scammed heavily by crims on the DarkNet. TRM’s analysis has revealed that scammers are employing deceptive tactics to persuade potential buyers of CSAM to make payments for non-existent images or exclusive access to galleries that are fake. Carry on, lads.
Crypto use is a preferred method of CSAM scammers, while actual CSAM sellers prefer traditional finance. The methods of advertising are also an indicator. Scammers widely publicise their offerings on the DarkNet, but true CSAM sellers lie low.
However, true sellers of CSAM do use crypto in small portions. TRM Labs identified US$3.5m sent to CSAM-related addresses in 2022. And unfortunately, cryptocurrencies are being used to donate funds to uploaders who make CSAM free on the dark web.
In 2016, according to TRM, Bitcoin was the most common crypto for funding terrorists. In 2022, this was replaced by digital assets on the TRON blockchain. And in fact, 92% of terrorist financing was done via TRON last year.
Tron is a blockchain-based decentralised platform that aims to be an entertainment ecosystem. The idea is that content creators can directly interact with their audiences without the need for intermediaries. Tron’s native cryptocurrency is called TRX, and is used within the platform to pay creators.
ISIS and its supporters were the main recipients of this terrorist funding, according to the report. TRM Labs say they uncovered ISIS groups in Pakistan and Tajikistan that raised large sums.
“While Bitcoin remains the primary cryptocurrency used, other blockchains were also available, including Ethereum, Monero, and Tron. Within Ethereum and Tron blockchain usage, USDT has been the primary cryptocurrency utilised in fundraising. TRON USDT usage has been identified as a secondary method for fundraising likely due to its price stability and lower transaction fees. The use of USDT TRON is likely to increase, with some fundraising campaign administrators stating that it is better for donations.”
The Chainsaw contacted the Tron Network for comment and is awaiting a response.
Crypto used to fund terrorism. Credit
Crypto and Murder-for-Hire
Bitcoin still seems to be the currency of choice for people wanting someone murdered, although there seems to be no instances where anyone has succeeded yet.
Last year, a man from Los Angeles in the US was busted trying to pay US$13,000 worth of Bitcoin to a DarkNet vendor. He was trying to hire an assassin to murder a woman who had rejected his advances, which makes any normal person scared to date anyone, ever again.
In another case in the US, a woman was busted trying to pay US$10,000 worth of Bitcoin to have the girlfriend of a man who rejected her murdered. Of course, the hitman she hired was actually undercover for the FBI. She was sentenced to ten years in jail.
In Italy, a man tried to pay €10,000 worth of Bitcoin to hire an assassin to kill his ex-girlfriend. In collaboration with Europol, the crypto services company co-operated with the authorities to help arrest him before it was too late.
Bribery and crime
Bribery and crypto seem to be good bedfellows. According to the report, many bribes were made in crypto in 2022, and the most famous case was that of our old friend and FTX scamster Sam Bankman-Fried.
Allegedly, Sam Bankman-Fried bribed Chinese officials with the equivalent of US$40million in crypto. What he wanted in return was an unfreezing of crypto assets worth US$1billion. This got the job done, and he managed to move the digital assets across to the US. He was later charged with bribery and is still yet to face the charges as he languishes in jail.
Privacy Coins and crime
Privacy coins are controversial, with examples being Monero, Zcash, and Dash. According to the report, these are the coins preferred by people buying drugs from the DarkNet. And this is a big market.
According to the report, US$1.5b was spent last year alone on the DarkNet inside markets specialising in illicit drugs.
Privacy coins are a type of digital currency that prioritises user privacy and anonymity in transactions. These coins go beyond the standard pseudonymity offered by traditional cryptocurrencies like Bitcoin. The fundamental principle is to obfuscate transaction details, making it hard to trace and link transactions to specific individuals.
In most countries, privacy coins are not illegal, however they have been delisted by exchanges in Australia, Korea and Japan.
While cryptocurrency is used by criminals to try to perpetrate misery on others, we need to remind ourselves that normal money is used way more when it comes to crime. And crims will be crims, no matter the currency.