Criminal groups use cryptography for efficiency.

Contrary to popular opinion, organized criminal groups employ cryptocurrencies, according to a newly released Chain Orisys blog post. Because they think it’s a perception that it’s more efficient, faster and anonymous. However, they have limited intentions or expertise in sophisticated obfuscation of their financial trajectories.

One of the biggest reasons criminal groups have resorted to using crypto is to enable rapid, borderless payments and enable networks to move funds globally without the delays or risks associated with traditional banking systems.

Why Criminal Groups Actually Use Codes

Mexican cartels are one of the crime groups increasingly taking advantage of Crypto’s benefits. They have been observed using crypto to pay Chinese suppliers of fentanyl precursors and taking advantage of low transaction fees and immediate remittances.

All actions that are not intentionally obfuscated in the blockchain are transparent and verifiable. Source: Chain Analysis

Many of these offenders operate on the general belief that codes promote financial anonymity that cannot be tracked. In fact, it occurs on the blockchain, as all single actions are not intentionally obfuscated, so it can be used by anyone with knowledge.

Ironically, that misconception has driven adoption, particularly among groups such as cartels and wildlife traffickers.

The fact that many of these bad actors have been using cryptography recently proves that they are using more, not because they think they are giving anonymity, but because they are unlimited by borders and simplifying financial operations for illegal activities.

This is why organized crime that utilizes cryptography is often unslearned, according to the report. Compared to state-backed cybercriminals like North Korean hackers who use advanced obfuscation methods such as mixers and privacy coins, Monero, traditional organized crime groups, are doing business without covering trucks.

These offenders often use regulated exchanges for cash out. This is the act of exposing funds to a KYC-compliant platform. A good example is a cartel-linked washing machine traveling through fentanyl travels, moving through a CEX account, leaving a clear on-chain trail.

It has also been observed that most groups have stuck to widely available cryptocurrencies such as Bitcoin and Stubcoin, and choose to avoid privacy coins due to the complexity that creates things and limited liquidity.

Because Crypto’s boundless nature allows us to reach a global customer base, the main focus is on scaling operations rather than avoiding detection.

That’s actually good news for law enforcement

As they don’t try hard to hide, the brave use of codes by organized crime groups for evil purposes creates a variety of opportunities for law enforcement.

As mentioned before, virtually every action that occurs in a blockchain can be tracked as it acts like an immutable ledger. This means investigators can track transactions in real time and map criminal networks across borders.

The fact that offenders also rely on CEXS, which complies with KYC/AML regulations, also helps authorities identify and freeze assets and collect chain off-chain intelligence. A good example of this came when the ledger co-founder was lured and investigators were able to track and seize almost every ransom fund.

Unfortunately, blockchain offers a way to track transactions, but Crypto has not yet become mainstream, and law enforcement faces challenges due to limited blockchain expertise.

Training will help more executives identify duplicate cases, but broader recruitment is required to properly utilize encryption transparency.

Mastering blockchain analytics also helps promote and support aggressive tracing, allowing law enforcement to disrupt criminal networks before crime escalates. This is important that this happens quickly, as criminals may eventually begin to adopt more sophisticated techniques.