900,000 Bitcoin Held By Darknet Market, BTC Scammers And Hackers, Analysis Reveals

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Almost 1 million BTC is in the hands of scammers, hackers and darknet users, says a study by analysis firm Chainalysis.

In its new Market Intel Report, Chainalysis found that bad actors held at least 891,781 BTC, representing 4.81% of the entire bitcoin supply. This number, worth $9.7 billion, represents the total potential amount of bitcoin that could enter the legitimate financial institutions, including crypto exchanges through laundering.

Chainalysis also found out that in the last seven days, darknet users placed 367 BTC, worth $3.7 million, to exchanges, $437,000 worth of BTC was transferred to mixers while $204,000 was transferred to other services. In money laundering, this process is called layering, wherein money is moved, transferred or even exchanged to hide its origin.

If an exchange does not catch the tainted bitcoin upon entry, the darknet user would have successfully laundered the money and integrate it into the financial system.  

A separate study by Crystal Blockchain also said darknet users send majority of the bitcoins to exchanges. But they choose to deposit BTC in exchanges with lesser or no verification requirements instead of exchanges with stricter regulations. 

Crystal Blockchain also revealed that darknet users are increasingly sending bitcoins to mixers, which are services utilized to hide the origin of a bitcoin. Still, many exchanges, like Gemini and Coinbase, are able to flag whether a bitcoin came from a mixer or not, leading to instances where they stop the coins from being deposited in their exchanges. 

Apart from the darknet, Chainalysis was able to detect bitcoin coming from bitcoin addresses associated with scam activities. In the last seven days, scammers have transferred 286 BTC to exchanges and 26 BTC to mixers. These are worth $2.7 million and $252,000.

Blockchain’s transparency allows firms like Chainalysis and Crystal Blockchain to track the scammers’ activity. Crystal Blockchain, for instance, was able to discover that some of the bitcoins collected from the massive Twitter hack eventually made their way to crypto exchanges Coinbase and BitMex.

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