Posted by: Greg Miller
October 1, 2014
Europol released a report on September 29, about the cybercrime threats to the internet. Called Internet Organised Crime Threat Assessment (iOCTA), the report looks at bitcoin, as well as anonymity focused coins, like Darkcoin, potential for criminal use.
We feel it should concern everyone that the latest cyber currencies are intended to be truly anonymous and to facilitate anonymous transactions. We face a situation where law enforcement may be completely unable to trace even very large criminal transactions.
While it is no surprise that anonymity in crypto-currencies is a worrisome trend for the powers at be, most of the focus of the report was on child porn. The report goes into a lot of detail describing the use of the crypto-currncies by online pedofiles, and try to say that crypto-currency is vital for the trade of CP media.
There are instances of CAM being exchanged via ‘Tor mail’ in exchange for bitcoins. Even though most offenders do not exchange CAM for commercial reasons, the valuable significance of the material associated to the anonymity of Tor and bitcoin creates the ideal setting to add a financial benefit to a traditional exchange.
This is Europol’s attempt to tie Bitcoin to child porn, but it is really ridiculous. Child porn isn’t a new trend, sadly. It has existed long before bitcoin, and has been sold for cash, and regulated online payments like WebMoney. It is a sick, and evil phenomenon, but one that was existed long before bitcoin.
Lack Of Darknet Markets
One interesting aspect was there a lack of focus on darknet markets, like Silk Road 2.0 or Evolution. Well it is true that these online drug markets represent no threat to the internet’s security, it is rare for such reports to make the separation.
They were mentioned though. When the report got to the subject of money laundering, darknet markets were mentioned. For the most part, the focus of the report was on more traditional aspects of online crime like hacking and child porn. It seems that Bitcoin is still localized to the online drug markets, and slowly growing across the online criminal world, and remains a smaller dot on their radar. The report did say that bitcoin is start to be “feature heavily in police investigations,” which means that bitcoin is being noticed more and more by law enforcement.
Fears Are Confirmed
During the money laundering chapter, there was a huge focus on crypto-currency. The report suggests unregistered, illegal exchanges or legal exchanges with poor KYC (Know Your Customer), can allow criminals to exchange bitcoins into bitcoins. It also noted the various mixers as a problem for controlling crypto-currency.
The report also suggested many regulations that would hope to stop the ease of laundering money through crypto-currency. The report says the ability to freeze, and seize funds are an important tool they need to have with crypto-currency. A even scarier, and more realistic, idea in the report is to get operators of businesses involving crypto-currency. Of course, this makes using clearnet business more risky than ever, but it was highly suspected that a relationship between clearnet bitcoin businesses, and law enforcement has and will exist.
Connection To ITOM
Europol, also known as EC3, is one of the agencies part of ITOM (Illegal Trade on Online Marketplaces), which is an operation focused on taking down darknet marketplaces. In an unofficial statement by an unidentified person in the agency leading the operation, said that part of the operation is to push regulation on crypto-currencies to give European governments more control over the digital. The operation also includes the US’s FBI and ICE.
This seems to be part of a major push in policy by the EU to start focusing on crypto-currencies and darknet marketplaces. From the page the iOCTA report was published on, this sentence is in the paragraph, “In particular, this threat assessment is intended to inform priority setting for the EMPACT Operational Action Plan for 2015 in the three sub-areas of the cybercrime priority.”
While it seems that the EU’s plans are coming to light, people in the USA should assume that the USA is underway with similar plans and operations, if not already further than their European counterpart. The Netherlands has the second highest amount of darknet marketplace related arrests, as illustrated with the Utopia/BMR busts, but the US has the highest amount of darknet marketplace related arrests in the world. While it is not surprising, it is an important indicator that the US is probably already focusing efforts against darknet marketplace.
While iOCTA is just a report, ITOM is well under way, and a real threat to darknet marketplace buyers and sellers in Europe. According to a presentation about the operation, as well an unofficial statement, efforts by ITOM to take down darknet marketplaces are well underway. The Utopia/BMR busts may of been a early success for this operation, but that is currently not possible to verify.
It seems the time has come, when the governments are the world are taking a more organized and systematic approach to deep web marketplaces, instead of going after individual cases.