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There has always been a concern with using Bitcoin (BTC) for nefarious online activities. The general concept behind blockchain transactions is veiled in anonymity. This becomes extremely attractive to money transfers funding illegal activities.
A recent post on www.coingeek.com covered the increased usage from darknet entities. The original report was issued by Crystal Blockchain. This is a cryptocurrency analytic and transaction tracing platform. It was created by Bitfury.
The main gist of the Crystal Blockchain report reviews the use of BTC by darknet entities. It also analyzes darknet interactions. These take place with exchanges and other online entities. The current data analyzed covers the first quarter of 2020.. It also compared that data with historical darknet activity over the past three years.
The results revealed an interesting twist. The number of BTC being sent and received by digital currency exchanges has decreased. The value in USD has expanded significantly with mixing services. These results were highlighted by a Crystal graph. It was entitled ‘Darknet interactions with cryptocurrency mixers’.
The data covers Q1 in 2017 right through March of this year. The amount of BTC sent to mixing services in Q1 of 2019 was $3 million. The amount sent in Q1 of 2020 jumped dramatically to $67 million.
A digital currency mixing service combines digital currency funds from different sources. This obscures the trail back to the original source.
Further research discovered that the amount of BTC received by darknet entities increased around 3x. This is tied to funds sent from mixing services. The figure in Q1 of 2019 was $400,000. This jumped to $2 million in Q1 of this year.
Darknet bitcoin owners have gravitated towards mixing services to better hide sources of funding. In the past, darknet entities made a habit of using digital currency exchanges to liquidate their dirty money. Once these exchanges added more stringent regulations, this practice started to subside.
Part of the regulations forced users to verify personal identification information. Also, more regulatory agencies started to monitor the activities of digital currency companies under their jurisdiction.
These actions have proved to be effective to a certain degree. The darknet activity has shifted away legitimate digital currency exchanges. That business is now transacted through mixing services.
Also on the rise are BTC transactions between darknet entities. In Q1 of 2019, $21 million was transferred. Moving to the first three months of 2020, that figure jumped to $55 million
The overall research by Crystal Blockchain clearly identifies darknet entities as increasingly active. They are also using BTC as a way to move illegally obtained funds. This continues to raise the concern among a number of government agencies.