Security & Fraud

Bitcoin Usage On The Dark Web Up 65 Pct YoY

The digital age, of course, has given rise to digital scams.

And now the fraudsters, increasingly, seem to be eyeing bitcoin, the marquee name in cryptocurrency, as coin of the realm across the dark web.

Earlier this week, Crystal Blockchain Analytics released a report that showed the value of bitcoins transferred across the dark web was up by 65 percent in the first quarter of the year to about $384 million.

It should be noted that the value of the activity rose, due in part for the price per bitcoin advancing through the period (thus the total number of transactions decreased). Along the way, the price of bitcoin year over year surged, on average, from a bit more than $3,500 a year ago to about $7,500 in the first quarter of 2020.

Crystal Blockchain has estimated that the total value of bitcoin transacted across the dark web rose by triple digits — roughly 340 percent — over the past three years.

“These statistics indicate that bitcoin continues to be a financial tool for darknet entities,” according to the report. Among a “worrying” trend noted by the report: That dark net entities continue to boost the amount of bitcoin sent between themselves.

Drilling down a bit, Crystal estimated that crypto exchanges are among the targets and recipients of bitcoin sent from dark net actors. Exchanges without verification requirements are among those receiving the most amount of bitcoin, at about 45 percent of the tally.

The share of bitcoin sent from one dark net entity to another, according to the report, surged from 10 percent last year to a more recent 19 percent, which the firm stated is due to growth in “dark net revenue and co-operation,” adding that “this share growth could also indicate that dark net users are trying to hide their bitcoin flow inside of the dark net itself, avoiding the risk of having their activities unveiled by entities (like exchanges) that have implemented FATF requirements.”

The report underscores the favor cryptos have gained in the underworld. In another finding, late last year, CipherTrace reported that cryptocurrency-related theft was poised to hit $4.4 billion, up more than 150 percent from all of 2018.

And as noted in this space last week, the FBI warned that crypto-related scams are gaining traction.

“People of all ages, including the elderly, are being victimized by criminals through cryptocurrency-related fraud schemes,” the bureau said, pointing out blackmail and work-from-home scams.  The FBI also noted that “many traditional financial crimes and money laundering schemes are now orchestrated via cryptocurrencies.”

The Better Business Bureau also chimed in on crypto-centered scams, estimating an average loss per victim aged 25 to 44 of as much as $3,000. The BBB found that cryptocurrency scams ranked above online purchase fraud and fake checks/money orders.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.