The U.S. Drug Enforcement Administration (DEA) has found that cryptocurrency use is now dominated by Bitcoin speculators, and the ratio of legal to illegal activity surrounding Bitcoin has reversed. A recent article interviewing DEA special agent Lilita Infante reveals that 5 years ago, 90 percent of cryptocurrency transactions were executed for criminal activity; that number has now dropped to 10 percent.
Special agent Lilita Infante is part of a 10-person Cyber Investigative Task Force and has been monitoring cryptocurrency activity since 2013. Her team focuses on dark web and virtual-currency related investigations. She works in direct partnership with the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
The DEA data suggest that despite illegal activity surrounding Bitcoin now making up a smaller piece of the crypto use-case pie, it by no means is on the decline. In fact, Infante says that total transaction volume of cryptocurrency associated with illegal uses has surged since 2013.
“The volume has grown tremendously,” said Infante. “The amount of transactions and the dollar value has grown tremendously over the years in criminal activity, but the ratio has decreased. The majority of transactions are used for price speculation.”
Black Market Beginnings
Cryptocurrency infamously began to first receive public attention when news circulated that Bitcoin was primarily being used on an un-monitored portion of the Internet known as the ‘dark web’. Dark web black markets like Silk Road, founded in 2011, are widely considered to be one of the first adopters of cryptocurrency for use in commercial transactions. The founder of Silk Road, Ross Ulbricht, known online as the ‘Dread Pirate Roberts’, was arrested by US authorities in 2013 and given a life sentence in prison. In 2017, Ulbricht’s life sentence was upheld by the U.S. Court of Appeals.
“The dark web, where illegal goods are sold, functions exclusively in cryptocurrency, as has been the case for years,” reports Bloomberg. “What’s become a growing trend in the past year is that criminal organizations, like drug cartels, are increasingly using digital currencies across their operations, from money laundering to cross-border transfers, as it’s cheaper, faster and perceived to be more secure than going through the banking system.”
Federal Authorities Using Blockchain to Track Down Black Market Traders
While Bitcoin and other blockchains were designed to securely hide user identities, special agent Infante reports that this is no longer the case. She states that the DEA and other federal agencies are continually developing new means to track down black market traffickers and money launderer’s using the very same blockchain technology intended to hide their activity. According to the DEA, even privacy-focused cryptocurrencies like Monero and Zcash are not as anonymous as people might think.
“We have ways of tracking them,” said Infante. “The blockchain actually gives us a lot of tools to be able to identify people. I actually want them to keep using them.”
While the actual total of cryptocurrency transacted on black markets remains unknown, it is without doubt a multi-billion dollar industry. In 2017, the U.S. Department of Justice claimed the proceeds of 144,336 Bitcoin seized when Silk Road was shut down in 2013, which alone totals nearly a billion dollars today.
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