Betweens sanctions and darknet markets, half of all transactions and digital assets traded were crime-related, the EU crime agency alleged.
Last week's announcement that the U.S. Department of Justice had "dealt a significant blow to the cryptocrime ecosystem" by shutting down Bitzlato, a tiny and lightly used exchange few had heard of before, led to a few rolled eyes and accusations of overhyping.
On Jan. 23, EU crime agency Europol added some details to that announcement, alleging that nearly half of all transactions and half of all the digital assets traded on the exchange, worth about $1 billion, were linked to crime.
Beyond that, "the majority of suspicious transactions are linked to entities sanctioned by the Office of Foreign Assets Control (OFAC)" Europol said — referring to the arm of the U.S. Treasury Department that designates sanctioned individuals and businesses. It added:
"The globally operating Hong Kong-registered cryptocurrency exchange is suspected of facilitating the laundering of large amounts of criminal proceeds and converting them into roubles."
With the onset of the Russian invasion of Ukraine, the use of cryptocurrency in sanctions-busting reached $8.8 billion — a staggering 10 million percent spike, according to blockchain intelligence firm Chainalysis' 2023 Crypto Crime Report. That drove illicit crypto transactions to an all-time high of $20 billion.
Sanctions/Darknet Crossover
There appears to be a fair bit of crossover between sanctioned entities and darknet transactions, however.
About 1.5 million transactions worth $700 million came via the Hydra Market darknet market for drugs, identity theft materials and money laundering services, the DoJ said. Scams and ransomware were also represented on the exchange, according to Europol.
In addition to founder Anatoly Legkodymov, arrested in Miami last week, four others, including its CEO, financial director and marketing director, were arrested in Spain and Cyprus. Its digital infrastructure was seized in France, offering investigators new channels to pursue.
