Nowadays, criminals heavily rely on cryptocurrencies to hide the source of their assets and use them for money laundering, fraud, and purchasing illegal goods and services. Dark web marketplaces often use cryptocurrencies as a preferred method of payment for buying drugs or child sexual abuse material. Cybercriminals also utilize them to carry out extortion schemes and purchase digital services and infrastructure for illegal purposes. Furthermore, the malware targets cryptocurrencies for theft and mining. Here are some examples of crypto crimes you should be aware of:
Money laundering
Criminals use cryptocurrencies to launder virtually all kinds of criminal profits, ranging from transforming vast amounts of cash into virtual assets to paying ransoms or criminal infrastructures. They purchase cryptocurrencies using illicit proceeds and transfer funds using them. The use of cryptocurrencies in money laundering schemes has increased, with many criminal networks relying on them as a payment medium during the COVID-19 pandemic.
Money laundering networks offering large-scale money laundering services have adopted cryptocurrencies and provided their services to other criminal networks, including acquiring or trading cryptocurrencies, legalizing criminal assets, and cashing out criminals' accounts. Dark web marketplaces advertise money laundering cryptocurrency service providers and offer information on exchanging Bitcoin for gift vouchers or prepaid debit cards to cash out cryptocurrencies.
The profits of online and offline criminal activities involve using cryptocurrencies for money laundering, frequently reported in drug trafficking, fraud, and cybercrime. Crypto crimes proceeds mainly come from online frauds, ransomware, and dark web marketplaces, and the highest volume of illicit transactions is associated with these criminal activities. Professional money laundering networks pose a significant threat, enabling other criminal networks to operate.
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- Crypto AML compliance in 2023: 5 things to consider
- Crypto AML & compliance basic
- Crypto regulation guides: understand AML requirements by country
Fraud
More than half of criminal transactions involving cryptocurrencies are linked to fraud. Fraudsters often either utilize professional money laundering services or set up their own money laundering schemes to hide the source of their illegal proceeds.
Cryptocurrency investment fraud is a particularly common form of fraud, with schemes identified in various EU Member States. Fraudsters set up websites promoting cryptocurrency investments, enticing investors with high returns and encouraging them to create accounts on online trading platforms. Alternatively, call centers may offer investment opportunities requiring small initial investments, resulting in significant profits. Victims believe they can monitor their investments through online platforms, but it is all a deception. Brokers use social engineering techniques to obtain personal information from victims and gain their trust by simulating trading activities.
Dark web marketplaces
Cryptocurrencies are commonly used as a payment method on dark web marketplaces, where illegal goods and services are bought and sold. These marketplaces often operate on anonymous networks, making it difficult for law enforcement to track down criminals involved in these transactions.
Dark web marketplaces offer a range of illegal goods and services, including drugs, firearms, counterfeit documents, and hacking tools. Criminals can use cryptocurrencies to purchase these items and services without leaving a paper trail, making it difficult for law enforcement agencies to disrupt these illegal activities.
For example, Hydra, the Russian-language marketplace, which started in 2015, is famous for selling illicit drugs, among other goods and services. Its safety features and reliability contributed to its growth, reaching an annual revenue of more than EUR 1.18 billion (USD 1.33 billion) in 2020. Hydra accounts for approximately 75% of the dark web market revenue globally. So, dark web marketplace generally related to most of crypto crimes
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Cybercriminals
Cybercriminals have increasingly turned to cryptocurrencies as a means to carry out their illicit activities. Cryptocurrencies offer a high degree of anonymity and are difficult to trace, making them an attractive option for cybercriminals seeking to evade law enforcement.
One common tactic used by cybercriminals is to demand ransom payments in cryptocurrencies, particularly Bitcoin, in exchange for returning stolen data or restoring access to compromised systems. Ransomware attacks have become a significant issue in recent years, with cybercriminals targeting both individuals and organizations.
Another way that cybercriminals use cryptocurrencies is by purchasing digital services and infrastructure for criminal purposes. They can use cryptocurrencies to purchase tools and resources, such as malware or hacking tools, to carry out cyber attacks.
Overall, the use of cryptocurrencies by cybercriminals has become a significant threat to individuals, organizations, and society as a whole. It highlights the need for strong cybersecurity measures and law enforcement efforts to combat these activities.
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Scorechain spots all Crypto Crimes
With the increasing adoption of cryptocurrencies and the growth of the crypto market, the need for effective solutions for identifying and preventing illicit activities has become more pressing. Scorechain's blockchain analytics platform is a powerful tool for combating illicit activities in the cryptocurrency industry. With the advanced transaction monitoring system, the platform enables businesses and law enforcement agencies to configure risks and quickly respond to potential threats, helping to create a safer and more secure cryptocurrency ecosystem.
Scorechain's blockchain analytics is also designed to be customizable and adaptable to different regulatory frameworks, allowing compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations in different jurisdictions. This has made it a valuable tool for financial institutions, crypto exchanges, and law enforcement agencies in the fight against crypto crimes.
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- Scorechain releases its advanced transaction monitoring system for holistic automation of crypto AML compliance
- Scorechain adds support for cross-chain transactions
- Scorechain releases a fully redesigned blockchain analytics platform
About Scorechain
Scorechain provides a blockchain analytics and transaction monitoring platform for crypto assets. As a leader in crypto compliance, the Luxembourgish company has helped over 200 customers in 45 countries since 2015, ranging from cryptocurrency businesses to financial institutions with crypto trading, custody branch, digital assets, customers onboarding, audit and law firms, and some LEAs.
Scorechain’s platform provides identifying data and risk assessment for comprehensive blockchains. The platform connects to different sources and block lists to provide risk scoring on crypto assets, transactions, addresses, and entities. The risk assessment methodology applied by Scorechain has been verified and is fully customizable to fit all jurisdictions. Customers can monitor infinite possibilities of risk scenarios with a wide range of parameters provided so businesses under the scope of the crypto regulation can report suspicious activity to authorities with enhanced due diligence.
