Since its inception, Bitcoin has been the most widely used payment tool among criminals operating in the markets of the darknet. Even today, with mainstream attention, global regulation, and billions in daily traded volume, the use of the decentralized, censorship-resistant, and universal cryptocurrency hasn’t waned, but its sourcing has changed, which can open a can of worms going forward.
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John Jefferies, chief financial analyst at CipherTrace, a blockchain analytics company told AMBCrypto that, in terms of countries, the biggest recipients of funds coming from criminal sources is Finland. Yes, the Nordic country at the cap of Europe, known for the saunas, lakes and Makkara is where Bitcoin from criminal sources is winding up. Not China, with the highest concentration of miners, the United States, the home of the original Silk Road, or Russia, where the world’s biggest darknet markets are centered, but Finland.
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The major reason Bitcoin from criminal sources end up in Finnish territory is because of one exchange – LocalBitcoins. Jefferies stated that LocalBitcoins “contributed to the high percentage of funds coming from criminal sources,” speaking generally of the country of origin and more specifically of the P2P exchange.
As can be seen in the chart above, Finnish exchanges contributed 12.1 per cent, courtesy of LocalBitcoins, followed by Russian exchanges with 5.21 per cent. The United Kingdom and Chinese exchanges complete the top-4 with 0.69 percent and 0.31 percent respectively.
The worldwide average depending on CipherTrace if 0.17 percent meaning, on average, for the countries which have cryptocurrency exchanges, they received 0.17 per cent of funds directly from criminal sources. While Chinese and British estimates were 1.82 and 4.05 times the worldwide average, the Finnish receipts were 71.17 times the average, emphasizing how important P2P exchanges are to criminal activity.
With this data on the market, two questions are pertinent – why the use of P2P exchanges? and is being the recipient of criminal funds their particular use? On the first question, P2P exchanges are relatively regulation-lax and simply behave as a middleman in transactions. This prevents such exchanges from doing financial transactions involving banks and governing bodies of participants countries.
Secondly, P2P exchanges are now seeing rising activity in several countries, many of which aren’t solely because of criminal activity. For instance, the volume of Bitcoin for local fiat currency via P2P exchanges has surged to new-highs in countries like Argentina, Chile, Kenya Nigeria and Lebanon. In other countries, there is a high premium on Bitcoin for local fiat. An integral reason for this is because of the dampening financial status, with some countries in worst strife than the others, citizens are turning to Bitcoin for…