Crypto Assets and Dark Web Crime: Challenges and Countermeasures

With the rise of Crypto Assets, their high anonymity and cross-border characteristics have inevitably been exploited by some criminals. In fact, the dark web has become one of the largest application scenarios for Crypto Assets. Although the famous dark web market "Silk Road" was shut down in 2013, new alternative platforms continue to emerge. Statistics show that dark web market activity doubled in 2020 compared to 2019.

The Rise of Dark Web Transactions

In April 2020, 530,000 Zoom account passwords were publicly sold on the dark web, involving several well-known institutions. Analysis shows that this was likely due to a credential stuffing attack on Zoom. Hackers used previously leaked account information and attempted to log in one by one on Zoom using automated programs, successfully obtaining a large amount of user privacy data.

This is just the tip of the iceberg for dark web transactions. In the past year, Bitcoin alone has set a trading record of over $1 billion in the dark web market. In addition to Bitcoin, other Crypto Assets such as Monero, Litecoin, Dash, and Ethereum are also increasingly appearing in illegal transactions.

Crypto Assets Become the Preferred Payment Method

The reason why Crypto Assets are favored by the dark web is mainly because they do not require third-party financial institutions, making transactions convenient and anonymous. Different Crypto Assets have their own characteristics: compared to Bitcoin, Litecoin is cheaper and faster; Monero has stronger privacy; and Dash uses mixing technology to enhance anonymity.

Tracking Challenges

Hackers often employ complex money laundering techniques, such as converting Crypto Assets into online game currency and then exchanging it for fiat currency. They also use techniques like diversion and consolidation to obscure the flow of funds. This poses significant challenges for law enforcement agencies in tracking.

The Necessity of Strengthening Regulation

In the face of the increasingly rampant dark web crime, there is an urgent need to establish an effective regulatory system:

1. Use KYT( Know Your Transaction) function to identify suspicious transactions.
2. Strengthen cooperation between enterprises, regulatory agencies, law enforcement departments, and exchanges.
3. Promote international cooperation and establish a borderless regulatory system.
4. Play the role of intermediaries for security companies to facilitate information sharing.

Some security companies have developed specialized anti-money laundering compliance and investigation systems to assist law enforcement in investigating the movements of involved Crypto Assets.

Duality Thinking

For dark web crimes, there are both pessimistic and optimistic viewpoints. Pessimists believe that technology is misused for criminal activities, while optimists think that lessons should be learned from it and these technologies should be used to benefit the public.

We cannot turn a blind eye to Crypto Assets crimes; instead, we should recognize their potential risks while also seeing their application prospects. In the future, close international cooperation and effective use of technology will be key to achieving sound regulation. Our goal is to ensure the healthy development of Crypto Assets while preventing them from becoming a breeding ground for illegal activities and a factor that undermines financial order.