While numerous pundits and policing agencies around the world have previously opined on the potential cryptocurrencies offer for criminal syndicates, Europol has now warned that ‘hardcore criminals’ have begun to shift their approach and have abandoned Bitcoin for darkcoins such as Monero, Zcash, and Dash.
In a statement to Business Insider, Europol cyber-crime analyst Jarek Jacubchek revealed:
“We can see a quite obvious and distinct shift from bitcoin to cryptocurrencies that can provide a higher level of privacy. So basically, you can achieve a higher level of privacy using these ‘altcoins’, and these altcoins are either using stealth as the basis, like monero. There are also coins like dash that do not have stealth addresses, they have transparent addresses, but they have a mixing process that is part of the protocol.”
The move comes amidst increasing regulatory pressure on Bitcoin exchanges and users in nations around the world, and more latterly policing operations have begun to use chain analysis tools to track down Bitcoin transactions held between criminal systems.
Europol further outlined that hardcore criminals have often shifted their use between multiple cryptocurrencies in a bid to hide their activities from investigators.
Despite this new trend, policing agencies have still noted that Bitcoin has seen continued popularity in-between criminal syndicates as well as law-abiding users. Tom Robinson, co-founder of cryptocurrency analysis firm Elliptic, explained that “the vast majority of illicit activity in cryptocurrencies is still taking place in bitcoin, because of its ease of exchange and more advanced infrastructure”.
The use of cryptocurrencies to fuel either criminal or terrorist activities have stoked the fears of some of the world’s leading governments. In January this year, a new bill was placed before US Congress that would effectively become the first piece of legislation that would offer rewards to information yielding convictions of cryptocurrency-supported terrorism.
Specifically, the bill proposes the establishment of:
“…an Independent Financial Technology Task Force, to provide rewards for information leading to convictions related to terrorist use of digital currencies, to establish a FinTech Leadership in Innovation Fund to encourage the development of tools and programs to combat terrorist and illicit use of digital currencies, and for other purposes.”
Juan Zarate, former deputy assistant to US President George W. Bush, and a former deputy national security advisor, has warned that cryptocurrencies could pose a major threat in undoing financial embargoes that have stemmed the tide of terrorism.
While the use of chain analysis tools might give governments and agencies an edge in tracking cryptocurrency-fuelled criminal activities, a wider pivot to darkcoins – which obscure transaction details and the identities of parties involved – might complicate the ability of law enforcement agencies to effectively regulate the use of cryptocurrencies for benevolent purposes.
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