06.12.2021

Criminal organizations and the mafia are increasingly using cryptocurrencies

People associated with organized crime are starting to use cryptocurrencies more and more actively. This is the conclusion reached by experts from the Italian Anti-Mafia Office (DIA).

The day before, they published a report on the role of digital assets in the activities of criminals in Italy for the first six months of 2020 – this is the last time period for which a full analysis of the data of their activity in the blockchain is available. Let’s talk about the situation in more detail.

The cryptocurrency is often criticized for its connection with criminals, and this has been true since 2011, when the Silk Road darknet market was created. We told his story together with the arrest of the platform founder Ross Ulbricht in a separate article.

While it is true that scammers and other lawbreakers can use a variety of digital assets, there are two important factors to keep in mind. First, criminals are using cash more actively, which leaves no traces. Secondly, transactions in almost all cryptocurrencies are permanently recorded in transparent blockchains, that is, anyone can study them.

Bitcoin cryptocurrencies

Bitcoin logo sticker

In this regard, it is corny and dangerous for violators of the law to get involved with some digital coins like Bitcoin or Ethereum. After all, if their identity can be linked to an address in the blockchain, then all activity can be traced. Former CIA chief Michael Morell spoke about this in April 2021, who also does not consider the crypt a convenient tool for criminals.

However, the situation in Italy hints at a different scenario.

How are criminals using cryptocurrencies?

The DIA spokesman in an exclusive interview with Decrypt noted that almost all criminal organizations in Italy have expressed their interest in cryptocurrencies to one degree or another. Here is his quote, in which the expert shares his vision of what is happening.

All criminal organizations, including the mafia, are interested in using cryptocurrencies for their illegal business.

This means that representatives of the reverse side of the law have already managed to assess the distinctive features of digital assets. In particular, the component of decentralization, that is, the absence of dependence on central banks and the government, as well as the ability to conduct a transaction to any address under any conditions, will be especially useful for them.

However, it is important to note here that blocking of funds in the world of cryptocurrencies also happens. For example, after the hacking of the Poly Network project, representatives of Tether, which issues the largest stablecoin USDT, froze the equivalent of $ 33 million in the hackers’ wallet. And although the latter returned the entire amount, this amount of funds was still blocked. The same can happen with digital assets sent to exchanges.

DIA criminals police Italy

DIA staff during arrest

DIA experts report that digital assets are being used to pay for synthetic drugs on the darknet. At the same time, the demand for such goods has grown significantly during the COVID-19 pandemic. The role of Bitcoin and altcoins in this process has strengthened, since a very large number of people find themselves in a lockdown, and cryptocurrencies have become a convenient payment tool for them.

The experts continue.

The country’s largest and strongest criminal syndicate, Ndrangheta, is increasingly resorting to modern tools like cryptocurrencies and the darknet.

Recall that in December, the analytical platform Chainalysis published its research on trends in the criminal world related to crypto. The experts managed to find out that despite the drop in the number of illegal trading platforms on the darknet, their total profit during the coronavirus pandemic has grown significantly. At the same time, the most popular cryptocurrencies for transactions are Bitcoin, Bitcoin Cash, Litecoin and Tether.

However, only large criminal organizations have the means to ensure sufficient “obfuscation” in cryptocurrency transfers, says Ingo Fiedler, co-founder of Blockchain Research Lab. According to him, this factor does not allow small platforms to compete with the “sharks of illegal business” on the darknet .

We believe that the results of this study are unlikely to end up with serious restrictions on working with cryptocurrencies in the country. Still, criminals actively use national currencies – and no one can fix this situation. In addition, the reputation of the digital asset niche is getting better.

As we learned the day before, the UK Financial Conduct Authority said that the Binance cryptocurrency exchange “was able to comply with all aspects of the requirements”, which were announced in June. That is, in fact, the regulator no longer has big claims to the exchange. Obviously, this was a consequence of the mandatory confirmation of the identity of users, which representatives of the exchange announced this month.

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