The illicit use of Bitcoin and several other cryptocurrencies has been declining. In an interview with special agent, Lilita Infante at the U.S. Drug Enforcement Administration, it was established that the illegal transactions that made up to 90% of the cryptocurrency exchanges all over the world, have now reduced to a 10%. While the use of the decentralized currency for nefarious purposes has subsided in numbers, the illegal use still prevails. The agent mentioned that Bitcoin speculators are now responsible for the major exchanges that are being made on the distributive ledger. Infante told Bloomberg in an interview at her office in Weston,
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 part of the 10-person Cyber Investigative Task Force. The CITF is responsible for investigating the crimes centered in Dark web, which is a place where most illegal activities take place online, as well as the illegal money laundering and trade that takes place in form of digitized currencies. The team also works together with the Federal Bureau of Investigation and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
This however in no way implies that criminals have stopped resorting to cryptocurrencies to launder money. Cryptocurrency is still being used on the dark web as means of payment for illegal activities and trading of illegal goods. The dark web can only be accessed by special browsers and requires the users to remain anonymous. This anonymity ensures that the person behind such transactions, never surfaces and doesn’t get caught.
This is where blockchain plays a very important part. Even though Bitcoin does not carry IDs, the transactions being available on a distributive ledger are accessible to the public. The investigators can track the funds and apprehend Individuals related to criminal activity this way. Infante further stated;
The blockchain actually gives us a lot of tools to be able to identify people. I actually want them (criminals) to keep using them (cryptocurrencies),
This use of blockchain technology to apprehend those individual involved in criminal activity only persuaded the fraudulent users to switch to cryptocurrencies that make tracking the wallet addresses more arduous. Currencies like Monero, Ethereum and Zcash are increasingly being used because of the increased anonymity it offers. Rob Wainwright, who is a former executive director of Europol tweeted,
We’ll see a progressive shift in 2018 towards criminal use of cryptocurrencies other than Bitcoin, making it generally more challenging for law enforcement to counter https://t.co/CAzr4spnK4
— Rob Wainwright (@rwainwright67) January 2, 2018
These cryptocurrencies hold lesser value as compared to Bitcoins, but they are easier to mine. Zcash has the ability to mask the information of a transaction. No information of the clients or the wallets that they own, can be tracked down. This special zero knowledge protocol is called ZK Snarks. Although the creators of Monero have also instantiated a system, which can hide the wallet, addresses of the clients, they are not immune to the high tech artificial intelligence algorithms that can trace them eventually.
The developers of these cryptocurrencies have vouched for them claiming that a decentralized currency is used because of the benefits it offers. The criminals avoid banking systems because their assets can be easily tracked down and confiscated. The chances of getting caught over the distributed ledger can be minimized if not abrogated completely. Monero core developer, Riccardo Spagni said;
As a community, we certainly don’t advocate for Monero’s use by criminals, at the same time if you have a decentralized currency, it’s not like you can prevent someone from using it. I imagine that Monero provides massive advantages for criminals over bitcoin, so they would use Monero.
While criminals are switching to altcoins, Infante remains positive that the blockchain technology will keep serving its purpose as a double-edged sword. Where it can help the criminals carry out their despicable actions, they may also help the authorities to track and apprehend them.