Chainalysis: 2021 Biggest Year for Darknet Markets Yet
Darknet markets had their biggest year yet in 2021, according to a new report by Chainalysis, the blockchain analytics firm. Proceeds received by crypto wallets linked to darknet market activity jumped 19% year-over-year to its biggest annual total ever – from $1.7 billion in 2020 to $2.1 billion in 2021.
These figures remain relatively small compared to the amount of stolen crypto funds, which jumped from $3 to $11 billion between 2020 and 2021. Most of these funds were stolen in successful hacking and phishing attempts, with proceeds concentrated among a much smaller number of “criminal whales” than darknet market whales.
Criminal whales – defined by Chainalysis as holding more than $1 million in illicitly-obtained cryptocurrency – now own over $25 billion in crypto funds, the report estimates.
Chainalysis also monitored the movement of funds belonging 768 criminal whales, plotting them according to times of transacting, and found that most activity occurred between the UTC time zones of 1-4, which suggests the majority of these whale reside in Russia. This also infers that most of the darknet market-associated whales use Hydra, which is based in Russia and is the biggest darknet market in the world.
“The ability to efficiently track criminal whales and quantify their holdings from one public data set is a major difference between cryptocurrency-based crime and fiat-based crime,” concluded Chainalysis in their report, noting that in some ways it is easier to hold crypto criminals accountable for their crimes.
“In fiat, the highest net worth criminals have murky networks of foreign banks and shell corporations to obfuscate their holdings. But in cryptocurrency, transactions are saved on the blockchain for all to see.” – Chainalysis
While use of privacy coin Monero (XMR) makes blockchain analysis much more difficult for law enforcement, Bitcoin (BTC) still dominates darknet markets as the coin of choice, supported by 93% of such markets, as opposed to Monero’s 67%.