In the recent months a few notable blockchain intelligence firms have intimated the status of Bitcoin holdings. They calculated the number of bitcoin within the dark-net and cyber-criminal circles.
1 Million bitcoins circulating in the dark-net
The findings, as interesting as they were, showed that roughly 1 million Bitcoin was being held by bad actors. It was also discovered that crypto exchanges serve the majority of dark-net users. Exchanges are used by dark-net users to exchange bitcoin to fiat currencies.
In addition, experts discovered that a host of bad actors depend on cryptocurrency mixing services. Without them it would be difficult for them to obscure the origins of their bitcoins.
According to data collected by blockchain analytics firm Chainalysis about 4.81 percent of the Bitcoin supply is in the hands of bad actors. Its new Market Intel Report places the figure at 891,781 BTC.
The above figure is calculated to be roughly worth $9.7 billion. These funds are reportedly being cleaned using traditional financial institutions and crypto exchanges. by money launderers.
Chainalysis discovered that in about a week more than 380 bitcoins where transferred by dark-net users. About 437,000 worth of Bitcoin was sent to crypto mixing services while 204,000 was placed to other services.
The above scenario is referred to as 'layering' within money laundering circles. Layering involves the complex movement, transfer or exchange of money to obscure its real origins. Money launderers have to prevent exchanges from flagging their coins. The hardest part is implementing them into the legitimate financial system.
Adapting to regulations
A separate research by Bitfury’s Crystal Blockchain highlights the role of Bitcoin mixers and exchanges. Without these two the dark net economy would not exist.
The crypto analytics firm noted the significant growth in the application of Bitcoin mixing services. The growth can be directly linked to recent dark-net growth.
Figures indicate that the amount of Bitcoin sent to mixing services by dark web platforms increased by 20 percent in the first quarter of 2020. a statistic that was in sharp contrast to Q1 2019’s 1 percent rise.
The research conducted also discovered that the number of bitcoins sent to KYC/AML compliant exchanges has dropped. The number of bitcoin received by exchanges that comply with the guidelines dropped by 13 percent.
The above figures show that dark-net users are responding to increased regulations. Most bad actors are choosing alternative trading services for money laundering reasons. The assumption follows the reality that Bitcoin mixers work by combining user payments into a single transaction hide the origins of the currency.
In total, dark web platforms transferred 7,946 Bitcoins to crypto mixing services in Q1 2020 – the Q1 2019 statistic stood at 790 Bitcoins. The Crystal Blockchain report reflected the crypto stats to a phenomenal $64 million growth in the value of Bitcoin sent to mixers in Q1 2020.
The blockchain transparency provides a window to analytical firms. Any crypto activity from around the world can be traced using the blockchain. Blockchain analysis firms such from around the world have played a huge role in the cyber-crime war.
Crystal Blockchain also tracked the coins received by the infamous twitter hackers. The coins made from the latest twitter-hack ended up in Coinbase and BitMex.