- Bitcoin darknet income increased last quarter, the fourth in a row
- Less actual Bitcoin was transacted by darknet entities, but the dollar value increased by $11 million
- Cryptocurrency mixing services saw 300% increase in usage from darknet entities
Bitcoin darknet income increased for the fourth quarter in a row during Q1 of 2020 in a blow to advocates who say that the currency is becoming more legitimate. A report by Crystal Blockchain Analytics shows although the amount of Bitcoin transferred between darknet entities declined in Q1 2020 compared to the prior quarter, the USD value of the Bitcoin received by those entities grew by $11 million. This is in part due to the increase in Bitcoin’s price during 2020, but is also reflective of a growing trend to use Bitcoin as a medium of illegal exchange, despite it not being the most suitable token for such use.
$384 Million Collected by Bitcoin Darknet Entities
The Crystal report on Bitcoin darknet use shows that Q1 2020 witnessed a slight increase in the amount of Bitcoin received by darknet entities compared to the prior quarter, worth $384 million compared to 2019 Q4’s $373 million. However, there was a noticeable drop in Bitcoin sent on by those entities – $411 million worth compared to $459 million in 2019 Q4. Among other reasons, this could mean that criminals are deciding to hold rather than sell their takings in the belief that Bitcoin is about to have another bull run.
Compared to the same point last year, the total amount of Bitcoin received by darknet entities decreased from 64,000 in Q1 2019 to 47,000 in Q1 2020, while the total amount they sent also decreased, from 64,000 in Q1 2019 to 50,000 bitcoin in Q1 2020. These reductions could be due to the growing popularity of the use of privacy coins such as Zcash and Monero, but it could also be down to the increasing dollar value of Bitcoin, given that darknet entities sent and received more dollar value last quarter.
Cryptocurrency Mixing Services See 300% Increase
In terms of how the Bitcoin was disposed of, 46% of Bitcoin sent to darknet entities ended up at exchanges that don’t have identity verification requirements while 13% ended up at exchanges that do, giving a total of 59% going to exchanges, down from 75% last quarter. This slack has been taken up by cryptocurrency mixing services, which saw a 300% increase in usage during the last quarter, with criminals likely seeing them as a legal means of protecting their ‘earnings’:
Illegal Bitcoin Use Being Sent Underground
The Crystal report highlights that the heightened regulation of crypto exchanges is having an impact, with the total amount of Bitcoin sent by darknet entities to such exchanges dropping significantly from 14,073 to 5,455. However, it also shows the inevitable – that far from throwing in the towel, criminals are seeking other ways of disguising their transactions with mixer services and unregulated exchanges.
Research such as this shows the general direction that illegal use of crypto is taking, and with regulation tightening with every passing quarter, we can expect the likes of mixing services to continue to grow as criminals seek a way to further preserve their Bitcoin darknet activities.