Darknet Turns To Bitcoin Mixers As Exchanges Get Stricter
The first three months of 2020 saw more bitcoin (BTC) sent by darknet entities to mixers, and less to verification-required exchanges, found Crystal Blockchain, a research arm of blockchain technology group Bitfury, indicating shady or criminal characters' preference for anonymous services.
Due in part to the mass adoption of BTC, its popularity and ease of use, darknet entities are continuing to utilize the world's number one coin, said Crystal in their latest report.
A point highlighted by the report is that "bitcoin mixing services continue to grow in popularity thanks to their use by darknet entities." In Q1 2020 there was a rapid growth in the amount of BTC sent from darknet entities to mixers - third-party services that 'mix' different transaction to obscure history and strengthen privacy. Comparing Q1 of 2019 to Q1 of 2020, the report finds that:
- Only 1% of BTC was sent by mixers to darknet entities last year, compared to 20% this year.
- The amount of BTC darknet entities sent to mixers went up from BTC 790 to BTC 7,946; in USD, the number went up from USD 3 million to USD 67 million.
- The amount of BTC received by darknet entities from mixers jumped from BTC 106 to BTC 288, or from USD 400,000 to almost USD 2 million.
Meanwhile, the amount in BTC sent to exchanges that require verification was reduced, from 24% in Q1 2019 to 13% in Q1 2020, said Crystal, likely in response to increased regulation and verification processes. This seems to "indicate a reduction in the use of cryptocurrency exchanges for criminal and darknet activities in favor of more anonymous services like mixers."
Interestingly, added the report, less BTC was sent to exchanges without verification requirements too - dropping from 60% to 46% of all BTC in a year, as these are likely being replaced with mixers.
Darknet activities are easy to monitor and identify with analytical tools, says Crystal, adding that the impact of the strong regulations to fight them is already apparent.
The report also stated that amount of BTC moved between the darknet entities grew in Q1, but between darknet and other entities dropped, perhaps because of the growing altcoin popularity, while the value in USD of the amount of Bitcoin transferred between the latter two grew by 65%, due to the BTC price appreciating and other above-given reasons.
This is Why Criminals Prefer Less Anonymous Bitcoin to Privacy Coins
A Bright Side to the Dark Web