How cryptocurrencies are linked to crime

Bitcoin is not a criminal operation, but it has certainly been useful for criminals. Some of the first major adopters of Bitcoin were online black markets on what is known as the 'darknet'. Criminologist Eveshnie Reddy from the University of South Africa explained these interactions to Phil Sansom...

Eveshnie - Basically, buyers and sellers of illicit products and services such as weaponry, illegal narcotics, stolen databases, malware, typically rely on cryptocurrency because it helps conceal transactions. It is actually therefore not surprising that cryptocurrencies have become the payment of choice when it comes to electronic commerce on the dark web.

Phil - And how big do these darknet markets get?

Eveshnie - Really big. In monetary value it's millions of dollars of sales that are actually made on these darknet markets. And I think gauging how much money is actually made on the darknet is difficult because law enforcement is not really aware of it.

Phil - What other types of crime are cryptocurrencies linked to?

Eveshnie - The darknet offers services such as tumblers and mixers, and these are money laundering services available exclusively on the dark web. So they basically allow users to transfer their cryptocurrencies into a pool of existing cryptocurrencies, which are then mixed or tumbled, hence the term tumblers and mixers, to basically in inverted commas 'make their dirty money clean'.

Phil - Will these cryptocurrency have been used for some of the darknet stuff that you were just talking about?

Eveshnie - Absolutely. It could be used by anyone, any person or organisation, who was paid in cryptocurrency - Bitcoin in particular - and wishing to make the proceeds of their illegal activity appear legitimate.

Phil - What if you don't just want to use cryptocurrency to help you do whatever crime you were going to do anyway? What if cryptocurrency is the target of your crime?

Eveshnie - So basically then we move on to a different category of crime, and there are several methods that criminals can use to illegally obtain information as a means to steal cryptocurrency, because that's the basic aim. Several exchanges have been hacked. They could also use your traditional phishing attack, which is basically to deceive individuals or organisations into believing that they are communicating with legitimate established enterprises.

Phil - Eve, do you think this is a big part of what cryptocurrencies actually are, or do you think this is kind of like a fringe area, and the mainstream of cryptocurrencies is very legitimate and this is a very small, tiny piece?

Eveshnie - I wouldn't say it's a small, tiny piece. I would think it's quite a significant piece. But I must admit that I do not think that cryptocurrencies are all about criminal enterprises. That's not what they were created for. I really do believe that, if properly regulated, cryptocurrencies could become more legitimised in the sense where we move away from their use in criminal activities.