Information Technology and Ethics/Usage of Cryptocurrency in Illegal Transactions

Illegal activity only accounts for 0.34% of all crypto transactions in 2020, or $10B which is down from 2%, or $21.4B, in 2019.

Ransomware, however, has increased believed to be partially caused by covid-19 increasing work from home. While Ransomware only accounted for 7% of crypto received by criminals, this represents a 311% increase over the year.

Because cryptocurrency is pseudonymous, you can only see where funds were sent but not who sent them, making analysis by companies like Chainalysis easier. This also means that it is an enticing way to launder money or finance terrorist organizations.

In 2019, the PlusToken Ponzi Scheme took over $2B from its victims. PlusToken is based in China and acted as a crypto wallet which would reward users with high rates of return if they bought PLUS tokens using Bitcoin and Ethereum. All in all, 6 individuals connected to the scheme were arrested, however, stolen coins still move through wallets presuming one involved individual is still free.

The main issues that stem from the usage of cryptocurrency in illegal transactions are that legitimate investors will be more wary to get involved as well as some governments making some or all cryptocurrency illegal due to this activity. While only 5.9% of Bitcoin users were involved in illegal activities, this accounts for 30% of all bitcoin activity. “The digital currency market is one of the largest unregulated markets in the world, with about 2,000 different currencies worth about $250 billion and a daily turnover of $60 billion”.

One reason researchers believe that there has been a decrease in illegal bitcoin users is the increase in alternative cryptocurrencies with more anonymity, such as Monero and Dash.

Chainalysis crypto-crime report

Scams make up most of the crypto related crimes, with the darknet market coming in second.