Depending on how the dark web is used, it can be both a boon and a bane. On the one hand, it protects dissidents from retaliation and enables whistleblowers to conduct business without restraint. On the other hand, it is an enabler of illicit activity, including the trading of illegal goods and services. It is the latter function that attracts illegal Bitcoin (BTC) holders.
According to a recent study, the dark web holds the largest share of known illegal bitcoins. data from tradingplatforms.com shows that the dark web holds over 360,000 bitcoins, accounting for 66% of known illegal bitcoins. This represents a 57% rise in the dark web's numbers over the past 180 days.
Edith Reads of tradingplatforms.com said, "There's an argument that cryptocurrency transactions are anonymous, but that's not the case. Cryptocurrencies are anonymous, but that also means that anyone can track you through your wallet address. The bad guys know this and are looking for more sophisticated ways to cover their tracks. This explains their preference for dark web markets."
Distribution of Known Illegal Bitcoin Holdings
Despite their dominance, dark web marketplaces are not the only places where known illegal bitcoins are held. Stolen funds account for the second largest share of these holdings. At the time of this writing, there are approximately 112,000 of these known illegal bitcoins.
This is followed closely by bitcoin scams, which hold nearly 62,000 known illegal bitcoins through fraud. Finally, other illegal activities took up another 12,000 or so bitcoins.
In addition to holding illegal bitcoins, bad actors also place these bitcoins. Placement is the first stage of the money laundering process. It involves "laundering" the illegal funds by channeling them to legitimate platforms.
"Laundering" Illegal Bitcoins
Analysis by tradingplatforms.com shows that scammers prefer bitcoin exchanges to their own wallets. As of press time, these platforms have helped place more than $5 million worth of bitcoin.
Other participants favor bitcoin blenders, also known as coin blending tools. At the time of this writing, these tools have helped process nearly $960,000 in bitcoin in the last seven days. Finally, other illicit services helped process about $1.3 million worth of bitcoin.
Is Bitcoin an Enabler of Crime?
Bitcoin and other cryptocurrencies have come under scrutiny for abetting money laundering and other financial malpractice. Skeptics say their decentralized nature makes them the perfect tool for committing nefarious acts.
However, market data shows that bitcoin associated with criminal activity accounts for only 3% of the overall bitcoin transaction volume. Likewise, the number of financial crimes supported by fiat currencies is relatively high.
According to the United Nations, the traditional financial system generates $400 million per year in illegal activity. In comparison, crime-related cryptocurrency transactions reached approximately $21 billion in 2021.