- A report by Elliptic has uncovered a dark side of Dogecoin
- The coin is routinely used by scammers and other illicit actors to funnel income
- While on the surface this may look bad, Dogecoin may have been unfairly treated
Blockchain analytics firm Elliptic has revealed a dark side of Elon Musk’s favourite cryptocurrency, Dogecoin, highlighting criminal use resulting in millions of dollars being funnelled through it as an alternative to Bitcoin and other cryptocurrencies. Scams, Ponzi schemes, and donations to terrorism groups are some of the ways in which Dogecoin is being illegally used, but the reality is that it in many ways it is no worse than many other cryptocurrencies.
Elliptic has identified millions of dollars worth of Dogecoin transactions connected to illicit activity including terrorism financing and vendors of child sexual abuse material (CSAM). https://t.co/a4x5pD1nuC#doge
— elliptic (@elliptic) June 21, 2022
Elliptic Finds Multiple Illicit Uses of Dogecoin
Elliptic states that it uncovered “millions of dollars worth of Dogecoin transactions connected to illicit activity”, with the vast majority consisting of fraud, scams and ponzi schemes. However, it also includes “the most serious types of crime, including terrorism financing and vendors of child sexual abuse material (CSAM).”
However, these most serious crimes involving Dogecoin typically see it used on a very small scale, with Elliptic using Hamas contributions as an example:
Nevertheless, as Elliptic points out, the fact that Dogecoin is used at all “demonstrates the awareness” that it can be used for such purposes. Elliptic also found that CSAM vendors are widening their net in terms of the currencies they accept, with more and more accepting Dogecoin, although usage is still low:
Again, while the majority of crypto payments to CSAM vendors are made using Bitcoin, a small and growing number of these vendors accept other crypto assets – including Dogecoin. To be clear, the level of Dogecoin usage within the CSAM community is currently very low, with less than $3,000 in payments globally identified to date.
Dogecoin is also accepted by a number of dark web marketplaces and far-right groups, while Ponzi schemes and other scams have also utilised it. Malware strains have been developed specifically to steal Dogecoin, taking tens of thousands of dollars in the process.
The Elliptic report may look bad for Dogecoin, and indeed the breadth of its illicit acceptance may be startling to some, but the amounts are typically very low, especially for the worst kinds of crimes, and in many ways it is no worse than any other cryptocurrency out there, so it seems almost unfair to target Dogecoin in this way.