According to a DEA agent, far more Bitcoin is being used for speculation than to facilitate crimes. That said, the number of Bitcoin used in various criminal acts is still rising.
DEA Use Blockchain Analysis to Identify Those Using Bitcoin for Illegal Purposes
It used to be the case that most Bitcoin being transacted was used illegally.
When Lilita Infante of the U.S. Drug Enforcement Administration (DEA) first began to notice the cryptocurrency appearing in her cases, data derived from the ledger of transactions showed that around 90% of all Bitcoin moving between wallets was associated with crimes. This number has shrunk considerably to just 10%.
Speculative uses are now responsible for most transactions today.
However, criminals are still using Bitcoin. In fact, according to Infante, the total volume of transactions used to facilitate crimes has rocketed since the digital currency first began to receive media coverage for its use on dark web marketplaces such as Silk Road. She told Bloomberg about the trends she’s noticed:
“The volume has grown tremendously, 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.”
Infante is a special agent at the DEA. She works on a 10-person task force responsible for investigating cyber crimes. This predominately involves cases where criminals have used the dark web and virtual currencies. Her Cyber Investigative Task Force also works closely with the FBI, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Such findings run contrary to the narrative painted in mainstream media of the digital currency. Many still believe that Bitcoin is only useful because it provides an anonymous form of currency for use in drug deals and other criminal acts.
However, more criminals are realising that Bitcoin offers very little in the way of privacy to its users. Investigators such as Infante can use the immutable ledger of transactions that is central to the cryptocurrency to trace where funds have come from and where they are going. This can then be used to identify those engaging in criminal activity using Bitcoin and other cryptocurrencies.
Recently, users of dark web services are increasingly turning to alternative currencies such as Monero or Zcash to transact more anonymously. Infante claims that her department have ways of tracking those too although the shielded transactions that are made possible by such privacy-focused currencies are certainly more challenging to trace.
That said, the figures Infante states indicate that most criminals are still using Bitcoin as a means of payment for more than just drug deals. Criminal networks are increasingly finding digital currencies useful for other purposes. These include cross-border payments and money laundering.
Infante doesn’t believe that the use of digital currencies for illegal means will end anytime soon. In fact, since most cryptos are based on blockchain technology, she actually says that she would prefer them:
“The blockchain actually gives us a lot of tools to be able to identify people… I actually want them to keep using them.”