Criminal Groups Still Prefer Cash To Bitcoin, EU Study Finds

Bitcoin and other digital currencies are seemingly tailor-made for use by organized crime groups, given that they’re widely used and allow for a level of anonymity. But a study by the European Union exploring financing options used by organized crime and terror groups claims that the technological barriers associated with using bitcoin and other digital currencies have so far prevented widespread adoption.

The use of cryptocurrencies by criminal groups – other than hackers - is fairly rare.

In its conclusion, the report claims that:

“few investigations have been conducted on virtual currencies which seem to be rarely used by criminal organizations. While they may have a high intent to use due to VCs characteristics (anonymity in particular), the level of capability is lower due to high technology required.

However, the EU said the money laundering threat posed by these currencies is “moderately significant,” given their ability to transfer money more or less anonymously.

“The assessment of the [money laundering] threat related to virtual currencies shows that organised crime organisations may use virtual currencies to have access to "clean cash" (both cash in/out). When used, virtual currencies allow organised crime groups to access cash anonymously and hide the transaction trail. They may acquire private keys of the e-wallets or obtain some cash from ATM. However, cases are quite rare at this stage and few investigations have been undertaken concerning this risk scenario. One of the reasons is that the reliance on virtual currencies to launder proceeds of crime requires some technical expertise. According to LEAs, the amounts of money laundered via virtual currencies are quite low, which tends to demonstrate that criminals' intent to use them is rather limited because this modus operandi is not considered as attractive enough (in particular because of the volatility of the virtual currencies' market). From a technical point, virtual currencies present some commonalities with e-money but the IT expertise at stake for virtual currencies means that organised crime would have lower capability to use them than e-money which is more widely accepted.”

Terrorist groups, the report concludes, may have “some interest” in using VCs to finance their activities, but the number of cases that have been reported are limited.

In its description of virtual currencies, the EU says they can be traded on the internet, are generally characterized by non-face-to-face customer relationships, and may permit anonymous funding or purchase. They may also permit anonymous transfers, if sender and recipient are not adequately identified.

But although virtual currencies have been grabbing headlines lately, the criminal economy is still overwhelmingly cash based. According to the report, this means that, whether they like it or not, perpetrators selling some form of illicit product are likely to be paid in cash. The more successful the perpetrators are and the more of the commodity they sell, the more cash they will generate. This is one of the reasons why the supply of cash - particularly high-value denominations - continues to rise beyond the pace of inflation, despite the advent of digital payment options.


shocktherapy Grandad Grumps Tue, 07/18/2017 - 05:00 Permalink

Erik Barnett from the Department of Homeland Security goes much further and states that:“If we’re not able to follow the money, criminal organizations will easily risk the loss of one conspirator and a certain sum of money to profit overall from a system that conceals their trail… eliminating the anonymity in virtual currencies is an appropriate balance to that concern.”… was previously widely believed that Bitcoin was anonymous and tracing bitcoin transactions was impossible. All changed when, on the 27th of February, a Reddit user published evidence that MT Gox possessed 200,000 bitcoinsby analyzing publicly available transactions. This analysis was later confirmed by Mark Karpeles, the then CEO of MT Gox which filed for bankruptcy claiming it had lost 850,000 bitcoins, when he publicly announced that MT Gox has “found” 200,000 bitcoins.The ability of the Reddit user to attribute ownership of 200,000 out of the 850,000 bitcoins claimed by Mark Karpeles under testimony to have been lost, provided a very public example of the possibility of attributing ownership of Bitcoin addresses with some level of accuracy in limited circumstances where ownership is known for one or more transaction in a chain of transactions. It is however possible to obfuscate transactions so that such analysis becomes incredibly difficult or impossible. is not anonymousSome effort is required to protect your privacy with Bitcoin. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances.… Coinbase Users Seek To Intervene In IRS Efforts To Access Bitcoin Info

In reply to by Grandad Grumps

MalteseFalcon Richard Chesler Tue, 07/18/2017 - 07:21 Permalink

 While [criminal organizations]may have a high intent to use due to VCs characteristics (anonymity in particular), the level of capability is lower due to high technology required.”Can't help but think that criminals do not believe that crypto-currency use is anonymous.Each coin contains a ledger of each transaction the coin been involved with, no?

In reply to by Richard Chesler

thisandthat tmosley Tue, 07/18/2017 - 11:39 Permalink

Don't tell this to that stupid euroshill Ghordius, because he was just "lecturing" us that the reason the EU comissioned that poll on cashless economy was because they "cared"... well, guess what this study is going to be used for - oh, wait; you already guessed...Anyway, newsflash: criminals are actually not stupid; it's just that the ones gettting caught are, while the real smart ones even go on to decide who's criminal and who's not... So, stop the press; we have a scoop, here!...

In reply to by tmosley

rtb61 Debugas Tue, 07/18/2017 - 04:45 Permalink

More likley it popped up on the radar pretty early and once they found out it was traceable, especially when travelling over the internet (when you have enough network and processing power), they let it live because it would basically flag users, as well, criminals of one ilk or another. When it will cause the most problems they will pull the plug and flush users out who panic.Cash is freedom in a capitalist society, nothing that needs a whole bunch of other stuff to work is ever going to be freedom in the same context. Country after country are trying to kill cash, at the behest of the finnacial class because it then gives them 'ALL' the power in a capitalist state, you don't buy anything in a cashless society, you ask you master permission to have it.

In reply to by Debugas

hooligan2009 Tue, 07/18/2017 - 05:38 Permalink

hahaha..what a jokedo the authors of this "EU study" have access to all criminal groups in Europe and the world?did they do some kind of time study on their usage of bitcoin for all segments of all criminal groups from arsonists to rapists to thieves to murderers or just select criminal groups that were most likely to use bitcoin (maybe kidnappers or drug pushers)?did the authors study payments made in bitcoin to a guatemalan from a korean?bitcoin users are anonymous; how did the authors figure out who was a criminal and who wasn't?perhaps more importantly, did EU taxpayers pick up the (2 million euro?) bill for this crock of shit libtard piece of "anal-ysis" 

burocracy Tue, 07/18/2017 - 06:26 Permalink

OR, they are in the racket by which Virtual Currencies are not anonymous at all, leave enough traces to make an elephant in high grass blush, and rely on a level of technology that long term can't be assumed as is. No, the EURO  cash is the place to be: it's like german paper, and yield more.

Anopheles Tue, 07/18/2017 - 09:16 Permalink

Of course criminals prefer cash.  What exactly are they going to do.  Roll a wheelbarrow with 10 million in cash to an exchange and buy that many Bitcoin? And then how exactly are they going to get out 10 million in cash? go to an ATM and get  10 million, in 20s?This is exactly why Bitcoin is useless for laundering money. There's no good way of getting it into or out of the system. 

Schmuck Raker Tue, 07/18/2017 - 09:22 Permalink

Crypto currency is in it's infancy. It will be more anonymous, less traceable with time.The whole argument against it on the basis of terrorist/criminal use is nothing more than totalitarian propaganda.Same as it ever was.

CJgipper Tue, 07/18/2017 - 09:47 Permalink

Your deal in what people have or can steal for you - cash. Now talk to the cartels.  How do you move 10k/day from Miami to your supplier in Bogata?  You deposit it in their bit coin wallet from an atm in Miami.Go look at where all of the bit coin atms are.  They're all right at the border between where the dealers live and the business district where they sell and/or transact business.