Legal Activity Dominates Bitcoin (BTC) Trading

Legal Activity Dominates Bitcoin (BTC) Trading

Legal Activity Dominates Bitcoin (BTC) Trading


  • Speculation is the dominant driver.

The ratio of legal to illegal activity in Bitcoin (BTC) has reversed, according to the US Drug Enforcement Administration (DEA).

When agency official started seeing the Bitcoin pop up in her cases at the DEA 5 years ago, her analysis of blockchain data showed criminal activity was behind about 90% of transactions in the cryptocurrency.

Now, illegal activity has shrunk to about 10% and speculation has become the dominant driver.

That does not mean criminals stopped using Bitcoin.

Total transaction volume associated with illegal uses has surged since Y 2013, said a DEA special agent and part of the 10-person Cyber Investigative Task Force. The team focuses on dark web and virtual-currency related investigations and collaborates with other Department of Justice (DOJ) units including the Federal Bureau of Investigation (FBI) and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF)

“The volume has grown tremendously, the amount of transactions and the dollar value has grown tremendously over the years in criminal activity, but the ratio has decreased. The majority of transactions are used for price speculation.’’

The DEA’s findings contradict the popular perception that Bitcoin is mostly being used by criminals.

The dark web, where illegal goods are sold, functions exclusively in cryptocurrency, as has been the case for years. What has become a growing trend in the past year is that criminal organizations, like drug cartels, are increasingly using digital currencies across their operations, from money laundering to cross-border transfers, as it’s cheaper, faster and perceived to be more secure than going through the banking system.

It’s a 2-edged sword for criminals though, as law enforcement is using blockchain technology to its advantage. Bitcoin and other blockchains are public and immutable, providing a valuable resource for agents to track transactions and patterns, and while wallet addresses once obscured users’ identities, that is not the case anymore.’

Though users sometimes will exchange Bitcoin for other coins with lower fees and faster transaction times to transfer funds, the overwhelming majority of dealings are still in Bitcoin. Privacy-focused cryptocurrencies like Monero and Zcash aren’t liquid enough and while they’re more anonymous than Bitcoin, “we still have ways of tracking them,’’ the DEA official said.

Traffickers and money launderers exchange Bitcoin for paper (fiat) currencies in OTC and P-P exchanges, though they also go through major US-based exchanges.

Expect that criminals will likely continue using cryptocurrencies, but that’s fine with the DEA.

“The blockchain actually gives us a lot of tools to be able to identify people’’

Currently, Bitcoin is trading at 6,734.9951, -214.77, or -3.09%, as of 1:06a BST, the market is open

Stay tuned…

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