Cryptocurrency has seen a vast growth in use as a storage of value as well as its nascent use as a currency. However, the level of growth that has accompanied cryptocurrency has always been marred by the tag of a tool for illegal use of dark web operators, money laundering, and for drug dealers. These issues with its manipulation tendencies continue to wade off institutional investors from cryptocurrency.
Also, the use of cryptocurrency for illegal activities continues to taint the image, stunt growth, and development of cryptocurrency.
Meanwhile, there has been considerable growth in the usage of cryptocurrency for legal activities, as noted by drug enforcement agencies in the United States in a report in July, while the illegal use is still yet to diminish. But the proportion of its legal use, especially as a store of value has seen a drastic increase in the recent past, as revealed in a DEA report.
Tracking Down Illegal Activities On Blockchain with Blockchain Analysis Services
Efforts to track the trend of illegal activities with cryptocurrencies seem elusive because of its external distributor resistant nature, as well as the privacy of the decentralized ledger. This makes the technology a potent tool for illegal activities. However, as noted by DEA’s report in July, there is a means in place to track every illegal activity on a blockchain to reveal the identity of perpetrators, despite the secrecy it offers. The DEA also stated in the report that they have the means to track illegal activities even on the most privacy oriented blockchain such as Monero.
The DEA, two months ago proved more worthy with a report of a data compiler, Diar. Diar revealed in a report that the American government had spent over $5.7 million of taxpayers money to purchase the services of blockchain analysis company.
Also, the growth of blockchain analysis firms such as Chainalysis, Elliptic, and CipherTrace, in identifying illegal activities on anonymous Bitcoin wallet is giving more solution to illegal acts in the cryptocurrency space. Transactions and wallets are traced back to cryptocurrency exchange to unveil the identity of illegal actors.
Increase Of Government Interest and Institutional Investors In Blockchain Analysis Firm
Diar’s report also further revealed that the project of kicking out illegal activities in cryptocurrency had become a burden on government institutions.
The IRS, FBI, SEC, and CFTC have tripled their spendings on the blockchain analysis service in the last six months. This reveals that the bearish trend of cryptocurrency does not fade away interest in bringing the illegal users of cryptocurrency to book in the United States.
Diars’ report noted that the pseudonym activities of cryptocurrencies provide intelligence agencies with a paper trail, which the blockchain analysis firms decrypt. The decrypted information leads to the prosecution of criminal acts. The increase of intelligence agency spending on it shows criminal acts through cryptocurrencies are in trouble.
The growth in investment and its impending success will give cryptocurrency due credibility.