A recently released report is shedding light on the evolution of Bitcoin’s presence and utility on the dark web.
The report reveals that those using Bitcoin to conduct transactions on the internet’s underbelly are shifting their behaviors as crypto tracing software grows more advanced and as exchanges start widely requiring users to complete KYC proceedings to access fiat on/off ramps.
This comes as a few particular exchanges see a massive surge in inflows from wallet addresses associated with nefarious transactions.
Use of Crypto Mixers Rockets by 900% Between 2019 and 2020
Users who are looking to launder their Bitcoin – whether it be simply for privacy’s sake or because they don’t want certain transactions being traced – can do so by using mixing services on the dark web.
These services pool assets from a variety of different sources and then redistribute them, making it incredibly difficult to trace the exact origin of the mixed crypto.
Mixing pools mainly exist on the dark web and are frequently used by both buyers and sellers of illegal goods and services.
A recently released report from Bitfury shows that the use of mixers is on the rise.
According to their data, in Q1 of 2019, a total of 790 BTC were sent to mixing services. This number spiked by 900% in Q1 of 2020, with a total of 7,946 BTC being sent to these services.
In dollar terms, this represents a roughly $66m increase.
They note that this is likely due to the widespread trend of crypto exchanges now requiring verification proceedings for users to withdraw funds.
Individuals and entities transacting on the dark web are likely using mixers as a buffer between their potentially nefarious activities and their spot sales on regulated exchanges.
“From this analysis, it seems that exchanges with verification requirements are becoming less popular as a way to withdraw bitcoin from darknet entities, while mixers are becoming more popular for withdrawing from darknet entities,” Bitfury notes.
These Exchanges are Favored by Those Moving Illicit Funds
NewsBTC reported yesterday that on-chain data suggests Huobi, Binance, and OKEx are the three platforms that are favored by those looking to offload crypto associated with illicit transactions.
One source cited within the report explained that these three exchanges received 60% of the Bitcoin transferred from “high-risk addresses.”
Image Courtesy of Unfolded. Data Source: PeckShield
As exchanges implement stricter regulatory requirements, there’s a strong likelihood that dark web users will begin looking towards peer-to-peer services to facilitate the sale and acquisition of Bitcoin.
Featured image from Shutterstock.