The cryptocurrencies
are both a technical and financial innovation and an additional channel for criminals to carry out certain operations. Europol’s latest report confirms and deconstructs some received ideas on the subject.
The European agency Europol, which specializes in the repression of international crime and terrorism, published this week a vast report which draws up a kind of inventory of the universe of crypto-currencies. First used by cybercriminals in the dark side of the force, today they are manipulated by all forms of serious and organized crime: money laundering, drug trafficking, fraud, illicit services and others. However, the report does not want to completely sell crypto as a world plagued with dangers and clarifies that in comparison to the illicit funds involved in traditional finance, those stemming from virtual currencies represent only a small part of the market.
The growing share of fraudulent transactions in the world of cryptocurrencies
It is inevitably difficult today to estimate the real extent of the illicit use of crypto-currencies in the context of criminal activities. The data varies according to the sources. The private sector, for example, estimates that the illegal use of virtual currencies represents only 0.34% of total transactions. An academic source that seems even more advanced reports that 23% of transactions amount to criminal activities.
What is certain is that the cryptocurrency landscape has changed over time. Since 2009 and the advent of Bitcoin as the first decentralized virtual currency, water has flowed under the bridge. Cryptocurrencies have become a means of payment, investment and transfer of funds adopted around the world. Cybercriminals have naturally taken advantage of the rise of this innovation to do business on the dark web and carry out basic fraud and extortion operations.
The cryptocurrency market is now dominated by the Bitcoin currency, with 44% market share. Other virtual currencies have emerged, such as Monero, which has grown in popularity in recent years, especially with cybercriminals, who appreciate the increased anonymity of its transactions, sending and receiving addresses being masked as well as the amount of the transactions. Some are torn with Bitcoin, which offers less protection – some privacy coins have been removed – but is still easier to exchange against other coins and currencies.
Cybercriminals cover their tracks by adding more and more steps to their laundering process
Cybercriminals are cautious. They make sure not to circulate the funds from portfolio to portfolio, but take care to make them go through various stages, which sometimes will involve several financial entities, often recent or even new, which are not yet part of payment markets. regulated and standardized financial institutions. Europol gives the example of BTC-e, a virtual currency trading platform founded by a Russian national in 2011, which was seized in 2017 by the US government, which had discovered that the service facilitated financial transactions linked to corruption, drug trafficking and cybercrime. BTC-e had thus processed more than 4 billion dollars worth of cryptocurrencies.
What must be remembered is that to avoid being traced and found too easily (because no, crypto-currencies do not offer real anonymity, each transaction being recorded on the blockchain which is most of the time accessible to the public), criminals are adding more and more steps to their laundering process. And the decentralization of this financial system obviously gives opportunities, because it makes it possible to circumvent the verification role of a traditional central authority, as well as potential geographical constraints. Transactions are thus faster, and they exploit regulatory loopholes.
Fraud, drug trafficking, child pornography: the other abuses of crypto-currencies
We have already talked about it in this article, money laundering is the main criminal activity associated with the illegal use of virtual currencies. With the Covid-19 pandemic, more and more criminal networks are relying on cryptos for their laundering. They have a perfect knowledge of the banking system and FinTech. These networks specializing in money laundering allow other criminal networks to operate. On the dark web, there are ads offering money laundering services. These service providers also provide the means to get rid of Bitcoins, for example, in exchange for gift certificates or prepaid debit cards.
Directly and perforce linked to money laundering, fraud is the predicate offense most frequently identified for the legal use of virtual currencies. It represents half of the criminal transactions in the world. In 2021, the Belgian and Swiss authorities managed to dismantle a criminal network based in Belgium which managed the global Ponzi-type scheme, to crack down on the social network Vitae, with the cryptocurrency of the same name. To activate their account on this website intended to remunerate its users for their likes and shares, customers had to pay 200 dollars each month. In the end, 223,000 people from 17 countries were trapped. The police force seized 1.1 million euros in cash, and 1.5 million euros in cryptocurrencies, not yet converted into cash. To lure victims, there are many deception processes, and the most effective is the creation of fake websites dedicated to cryptocurrency investments, which then use social engineering.
Drug trafficking and cybercrime are also growing with the help of cryptocurrencies. Today, hackers have mastered obfuscation techniques and services that allow them to hinder the traceability of transactions. Virtual currencies are used as a real means of payment on dark web marketplaces and are also used, on the side of the victims, to remunerate their executioners in the event that they suffer from ransomware. The monetization of child pornography material (the CSAM) is the latest growing threat taken very seriously by Europol. The revenues of sites broadcasting such content tripled between 2017 and 2020, explains the agency.
Sources: Europol
, chain analysis
, Sydney University of Technology
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