Chainalysis Launches Publicly Free Market Intelligence Site

As it stands now, the site is tracking a handful of cryptocurrencies: Ethereum, Bitcoin, Bitcoin Cash, Tether, and Litecoin. Market Intel stands, in a …

Chanalysis, the well-known blockchain analytics firm, has launched a new website, dubbed Market Intel. This site is developed with financial regulators and asset managers in mind, who are keen to monitor the crypto markets and their overall health.

Serving A New Niche

The website itself is still in beta version, but is free and open for use by the public at large. This site will provide daily metrics regarding the demand, trading, generation, supply, insights, and risks regarding cryptocurrencies, and how they’re flowing between regions and entities. As it stands now, the site is tracking a handful of cryptocurrencies: Ethereum, Bitcoin, Bitcoin Cash, Tether, and Litecoin.

Market Intel stands, in a couple of ways, as a response from various pieces of feedback Chainalysis has received. Particularly those of traditional asset managers, regulators, as well as everyday people from ordinary walks of life. These people aren’t really interested in the most sophisticated blockchain analytics solutions that Chainalysis can provide, but are still interested in the crypto markets and information about it. This comes from an interview that Philip Gradwell, the Chief Economist of Chainalysis, did with The Block, a crypto media news outlet.

Fund Flows to Crypto Companies Decline In 2019

Playing The Long Game

This stands as a long-term play from the data aggregator, as well. The level of sophisticated on-chain analytics that Chainalysis provides has a rather narrow market, Gradwell explained. However, the hope is that if you provide more information about crypto as a whole to regulator investors, they’d be more keen to enter the market. Should they enter the market, however, they may even be willing to pay for a level of information more in-depth than what Market Intel provides.

Gradwell explained that this stands as to why Chainalysis has put in all the work needed to try and get away from the more technical aspects of blockchain analytics. Instead, Market Intel provides information in a more real-world sort of way. An example of this would be how Chainalysis uses several on-chain data points to estimate flows between world regions, including that of repeated diurnal patterns.

Many Measurements To Consider

Furthermore, the firm spent a year in the development of an algorithm that can estimate exchange flows from crypto-to-fiat. This signifies how many people are cashing out, as opposed to flows from one form of crypto to another, as Gradwell explained it.

Intel Market will also track indicators of risk that have become associated with specific currencies. This includes the “known illicit flows,” which stands as a percentage of total flows. This metric consists of the known illicit funds held, as well as the known illicit funds that were placed in legal services.

Almost 1 Million Bitcoin is Held by Darknet Markets, Scammers & Thieves

Laundering of illicit Bitcoins. Source: Chainalysis. Exchanges play a pivotal role. Regardless of origin, the top destinations for illicit Bitcoin are crypto …

According to Chainalysis, almost one million Bitcoin (BTC) is held by illicit actors in the space with over half being held by darknet markets.

Bitcoin held by illicit entities

Bitcoin held by illicit entities. Source: Chainalysis.

Illicit markets currently have 585,000 BTC in their possession, scams have 99,000 BTC, stolen funds constitute another 205,000 BTC, and all others hold an additional 3,000 BTC — a grand total of 892,000 BTC. According to Chainalysis, only 0.32% of all current Bitcoin flows are tainted by illicit activity.

Laundering of illicit Bitcoins

Laundering of illicit Bitcoins. Source: Chainalysis.

Exchanges play a pivotal role

Regardless of origin, the top destinations for illicit Bitcoin are crypto exchanges. This coincides with the observed behavior of Twitter’s recent hackers, who were quick to move their newly acquired assets to the exchanges.

Roughly 300,000 Bitcoin is held by scammers and thieves. In recent years, crypto exchanges have begun to take their Know Your Customer and Anti-Money Laundering procedures more seriously. These policies make it harder for criminals to offload their ill-gotten loot, which also bodes well for the market as massive selloffs by the criminals could lead to a collapse in price.

US Law Enforcement Is Watching for Bitcoin Drug Purchases on Darknet

The NCIS has seen an uptick in darknet purchases using Bitcoin. Blockchain analytic firms discuss procedures to combat crypto-related crimes, along …

Seven years ago, agents from the United States Federal Bureau of Investigation busted into a San Francisco Public Library to arrest Ross Ulbricht, the mastermind behind the Silk Road. Launched in 2011, the Silk Road was the first modern darknet market where anonymous users could purchase illicit drugs, weapons and other illegal goods using Bitcoin (BTC).

Although the Silk Road was shut down in 2013 following Ulbricht’s arrest, many individuals still use Bitcoin and other cryptocurrencies to purchase illicit drugs from darknet markets. For example, a recent press release issued by the Naval Criminal Investigative Service, or NCIS, states that over the past year, there has been an increase of drug-related investigations involving Navy personnel. Many of these individuals have specifically been caught purchasing LSD using crypto on darknet markets. The release notes:

“Recent law enforcement reporting has revealed that an increasing number of people are moving to purchasing illicit substances via the dark web because of the perceived anonymity provided by tools like The Onion Router (TOR). They also use cryptocurrencies such as bitcoin to pay for purchases.”

Although darknet markets are havens for tools like TOR, which offer anonymity by obscuring IP addresses, law enforcement officials have been using new techniques to identify purchasers and sellers across these marketplaces. Additionally, while some cryptocurrency transactions can be anonymous, many are traceable. Michael Meyer, the chief information officer of automated crypto trading platform ArbiSmart, told Cointelegraph that while using crypto to purchase illicit drugs may appear to be secure, Bitcoin transactions are not that private:

“Even with the transparency associated with crypto, Bitcoin is not as private as people tend to think. Companies like Chainanalysis and CipherTrace are able to provide a lot of details about each transaction, which eventually can reveal the identity of those wallet owners and people involved.”

The NCIS has issued a warning to navy personnel regarding the risks involved with making illegal purchases on darknet markets. The NCIS has also noted that international, federal, state and local law enforcement agencies have been working together to infiltrate these markets while identifying and prosecuting those involved.

Law enforcement is getting smarter

John Jefferies, the chief financial analyst at blockchain analytics firm CipherTrace, told Cointelegraph that virtually all darknet market transactions occur using cryptocurrency. While this may be, Jefferies pointed out that law enforcement is upping its game, saying:

“Criminals are either under the misconception that crypto is anonymous, or they think they can launder it. However, the very basics of money laundering in the real world now apply to the crypto world.”

In June 2019, the Financial Action Task Force, or FATF, established a set of traditional banking regulations to be applied within the crypto sector. Also known as the “Travel Rule,” these new guidelines provide Anti-Money Laundering and Know Your Customer measures regarding cryptocurrencies. These rules are ultimately meant to prevent cryptocurrencies from being used for money laundering. The FAFT noted that the Travel Rule would be a requirement for digital asset service providers to enforce by June 2020. However, it appears that it may take longer than expected for the entire crypto sector to adopt these regulations.

Yet according to Jefferies, some progress has already been made. According to CipherTrace’s spring 2020 cryptocurrency crime and AML report, the global average of direct criminal funds received by exchanges decreased by 47% in 2019. This demonstrates a three-year low for crypto exchanges globally, with only 0.17% of funds received by exchanges in 2019 coming from criminal sources. In addition to the travel rule, Jefferies noted that CipherTrace has created a training program called the “Defenders League” where students are trained by professionals to investigate crypto criminal activities:

“It took a while to get the program going, but we already have about 30 students in the training program from a university in Monterey, California, that specializes in financial crime management. We also just created an inbound bot to qualify these cases. When law enforcement becomes more in tune to combat these crimes, this program will help.”

It’s also notable that the former U.S. Under Secretary of the Treasury for Terrorism and Financial Intelligence, Sigal Mandelker, recently joined a board of advisors at Chainalysis — a crypto forensics firm that provides crypto transaction data to the FBI and the Internal Revenue Service. It is rumored that Mandelker will help provide Chainalysis with insights on how to properly investigate crypto-related crimes, along with creating partnerships with federal officials.

Silk Road was just the beginning

While new procedures are being implemented to combat crimes related to crypto, new challenges have started to emerge, many of which stem from the short-lived success of Silk Road. According to Jefferies, there are still many versions of Silk Road today. He noted that drug dealers will often set up on four or five darknet markets while also creating their own websites as an alternative to generate extra revenue:

“We’ve seen an uptick in the number of new darknet markets emerging. We are tracking hundreds of vendors that sell drugs online. Our quarter-four report shows that Russia’s largest darknet market, Hydra, claimed to be doing 100,000 transactions a day with three million users.”

In addition, Jefferies mentioned that street crime is becoming more involved with crypto as well. “Drug dealers who would often only accept cash are now accepting cryptocurrencies, actually creating some advantages for law enforcement,” he said. Jefferies further pointed out that drug dealers and other criminals may be turning toward crypto due to the increase of crypto ATMs, or BTMs, which have made it more accessible. According to Statista, as of July 8, 2020, there are 6,366 Bitcoin ATMs in the U.S., and they continue to cause laundering concerns.

Todd Maher, the president of compliance at advisory firm BitSource AML Solutions, told Cointelegraph that while there has indeed been an increase in BTM usage, it hasn’t been proven that this is driving criminal activity: “Whether these BTMs are being used for the purchase of drugs has been inconclusive, with tools in place to assist in mitigating illicit usage risk,” further adding: “From the audits and clients that I service, the correlation of Bitcoin purchases to darknet markets and criminal addresses have been minimal.”

Maher further noted that each BTM operator is required to have an AML program in place to combat money laundering and terrorist financing. As a registered Financial Crimes Enforcement Network money service business, these providers also require a dedicated compliance officer, an annual audit of their AML program and regular training to assure that there is an acceptable culture of compliance within their operation. He elaborated:

“A BTM operation with strong internal controls is able to mitigate a great deal of inherent risk, leaving for a low residual risk. A risk assessment being conducted on their operation with an AML policy addressing these risks is the first step to combating financial crimes.”

Bitcoin Cash Captured More Than 10% of Darknet Sales Last Month

Moreover, statistics from the blockchain analytics provider 1000x Group show digital currencies like bitcoin cash (BCH) have joined BTC’s dominant …
Bitcoin Cash Captured More Than 10% of Darknet Sales Last Month

2019 was an interesting year for darknet markets (DNMs) and a number of marketplaces closed for a variety of reasons. Despite the closures, crypto payments on DNMs doubled for the first time in five years. Moreover, statistics from the blockchain analytics provider 1000x Group show digital currencies like bitcoin cash (BCH) have joined BTC’s dominant role within the deep web.

Also Read: BCH Merchant Directories Now List 4,300 Bitcoin Cash-Accepting Businesses

1000x Group Data Shows An Uptick of Bitcoin Cash Used for Darknet Sales

There’s been a number of reports on DNM usage last year and action on the invisible web continues to be interesting in 2020 as well. Just recently, the blockchain surveillance firm Chainalysis published a report that showed DNM payments doubled for the first time since 2015. Not only did the value of BTC sent to DNMs increased by 70%, but Chainalysis also noted that DNMs will likely accept cryptos with a focus on privacy like monero (XMR).

News.Bitcoin.com looked further into darknet payment statistics by leveraging analytics from the provider 1000x Group between January 7, and February 4, 2020. 1000x Group’s dashboard shows data from 15 different markets and ten of them accept BTC only. This includes markets like Silk Road 3.1, Hydra, Wannabuy RDP, Sipulimarket, Escobay, and Joker’s Stash. The DNM Monopoly accepts monero (XMR) only and during the four-week time span, there were four DNMs that accepted coins like BCH, LTC, and XMR in addition to BTC. The four DNMs included Cannazon, Empire, Darkbay, and Apollon. However, the darknet market Apollon allegedly exit scammed five days ago.

Bitcoin Cash Captured More Than 10% of Darknet Sales Last Month
Darknet tracker data provided by the blockchain analytics provider 1000x Group.

The four-week time span measured on 1000x Group’s dashboard shows XMR, LTC, and BCH were used on Monopoly, Cannazon, Empire, Darkbay, and Apollon. Monero represented 56% of the payments on DNMs between that time. LTC captured 29% and BCH saw 12% of sales during the time frame ending on February 4. While Monopoly, Darkbay, Empire, and Cannazon all accepted XMR, Darkbay and Empire processed payments in litecoin (LTC) as well.

The marketplace Apollon accepted BTC, XMR, LTC, and BCH during the four-week time span and grew popular due to its multi-coin acceptance. In fact, before Apollon’s alleged departure, the DNM was probably one of the most active markets on the invisible web. Data scrapes from four researchers at the Australian National University (ANU) indicate that Apollon started small, but had since “exponentially grown in size.” Apollon grew larger after Dream Market’s ‘soft’ exit in the summer of 2019. The multi-currency DNM showed 4,500 listings and Apollon admins claimed it had more than 30,000 registered users.

Bitcoin Cash Captured More Than 10% of Darknet Sales Last Month
Between January 7 and February 4, 2020, Bitcoin Cash saw an uptick of use on DNMs. Darknet tracker data provided by the blockchain analytics provider 1000x Group.

A Private Peer-to-Peer Marketplace, Cashshuffle, Schnorr Signatures, and the Innovative Cryptography Behind Cashfusion

One interesting fact about 1000x Group’s payment data shows the increase of bitcoin cash (BCH) usage between January 7, and February 4. BCH development during the last year has seen a significant increase in privacy methods applied to the coin. Proponents of BCH believe that the peer-to-peer cryptocurrency has even better privacy enhancements than most coins that exist today. During the last year, the BCH ecosystem has seen the basics of Schnorr Signatures added to the chain and the Schnorr protocol was enhanced again during the last upgrade.

In March 2019, Electron Cash developers unleashed the official iteration of the Cashshuffle protocol and so far BCH users have shuffled 209,490 BCH to-date ($94 million). BCH users also saw privacy push in June, when Bitcoin.com launched its peer-to-peer BCH marketplace. Users from all around the world can trade bitcoin cash in a private manner and leverage encrypted chat and a secure blind escrow system.

Bitcoin Cash Captured More Than 10% of Darknet Sales Last Month
With our peer-to-peer BCH marketplace, you can buy and sell BCH privately using our noncustodial, Local Bitcoin Cash trading platform.

Beyond all that, BCH has also seen the introduction of Cashfusion, which has given the decentralized asset a much higher set of anonymity. Not only are BCH proponents using Cashfusion, but the privacy-enhancing software is making waves with BTC proponents as well. The creator of Wasabi Wallet complimented Cashfusion after he listened to Mark Lundeberg’s recent interview with Naomi Brockwell and he made some positive remarks about the protocol in another tweet as well.

Bitcoin Cash Captured More Than 10% of Darknet Sales Last Month
Cashshuffle data provided by the website stats.devzero.be/#/

Typically, the publication Bitcoin Magazine doesn’t cover Bitcoin Cash topics, but the news outlet’s Aaron van Wirdum wrote an objective article on the new privacy protocol for BCH. Not too long after that article, data analyst James Waugh also commended Cashfusion’s privacy advances in a recent Medium post. Waugh disclosed he queried a number of transaction inputs and outputs and realized that it’s “not possible to establish a concrete link” between them. Essentially, Cashfusion in Waugh’s opinion is far more practical than other Coinjoin protocols.

Bitcoin Cash Captured More Than 10% of Darknet Sales Last Month
Cashfusion data provided by the website stats.devzero.be/#/

It’s quite possible that the increased use of BCH on prevalent DNMs is attributed to the added privacy benefits BCH offers to everyday users. With 44,737 shuffles using Cashshuffle to-date and close to $100 million transactions shuffled, the protocol has gathered a lot of traction. Additionally, at 94,574 accounts on Local.Bitcoin.com since the peer-to-peer platform’s launch, data indicates there’s significant interest in trading privately. There have also been 2,250 fusions so far using the Cashfusion protocol since November 28, 2019, and there’s been 10,103 BCH fused to-date ($4.5 million).

It’s a shame that a DNM like Apollon is likely out of the picture, as it was the one marketplace that was popular for offering multi-currency support. As time progresses, it’s still quite probable that other DNMs will support BCH going forward, due to all the privacy-enhancing benefits that stem from recent BCH development.

What do you think about the data from DNMs from 1000x Group’s blockchain analytics data between January 7, and February 4, 2020? Do you think the addition of things like Local.Bitcoin.com, Cashshuffle, Schnorr Signatures, and Cashfusion is the reason why BCH use on DNMs saw increased exposure? Let us know what you think about this topic in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, darknet markets, services, or companies. Bitcoin.com does not provide investment, tax, legal, accounting or any advice. It has also been noted in the report above that the DNM Apollon is accused of exit scamming and readers should be aware of that situation. The data determined in this article reflects payments on February 4, 2020 and the four weeks prior. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.


Image credits: Shutterstock, 1000x Group, stats.devzero.be/#/, Fair Use, and Pixabay.


Did you know you can buy and sell BCH privately using our noncustodial, peer-to-peer Local Bitcoin Cash trading platform? The local.Bitcoin.com marketplace has thousands of participants from all around the world trading BCH right now. And if you need a bitcoin wallet to securely store your coins, you can download one from us here.

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Jamie Redman

Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written thousands of articles for news.Bitcoin.com about the disruptive protocols emerging today.

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UK Police Arrest Teen for Hacking Unreleased Music to Sell for Crypto

Neil Wals, chief of the United Nations Office on Drugs and Crime Global Cybercrime Program, warned last month that cryptocurrencies have made …

City of London Police have arrested a 19-year-old citizen suspected of hacking major music acts in a bid to steal unreleased songs and sell them for digital currency, Canadian daily newspaper The Vancouver Sun reported on Sept. 13.

The Manhattan District Attorney’s office initiated an investigation after receiving complaints from management companies of recording artists. Commenting on the matter, Detective Inspector Nick Court from the City of London Police Intellectual Property Crime Unit stated:

“Today’s action marks a significant point in our investigation into the individuals responsible for stealing music and selling it on illegal streaming websites, worldwide.”

Crypto facilitates crime?

Criminals have increasingly used cryptocurrencies for illicit activities, according to blockchain security company CipherTrace. In 2019, bad actors primarily used Bitcoin (BTC) for buying and selling illegal drugs, weapons, as well as cyber and banking credentials on darknet markets.

Neil Wals, chief of the United Nations Office on Drugs and Crime Global Cybercrime Program, warned last month that cryptocurrencies have made combating money laundering significantly harder. He believes that cryptocurrencies add a layer of secrecy, which can facilitate crime.

Entertainment embraces digital currencies

Nonetheless, digital currencies are quietly entering the entertainment sector, with its major players exploring and embracing the new asset class. Earlier in September, Korean pop music giant SM Entertainment revealed plans to build its own cryptocurrency and blockchain. SM Entertainment reportedly expects the blockchain platform to bridge the physical and virtual world.

Global media giant Warner Music Group will also be creating digital assets using new public blockchain backed by CryptoKitties creator. The company’s recent investment of not less than $1 million in the form of a convertible security intends to unlock a new method for sharing Warner Music’s content as well as a new type of engagement with artists.