Is Cryptocurrency Being Used for Illegal Activities? Three Reported Instances

Cryptocurrency fraudsters are apparently advertising on social media using images of celebrities to promote cryptocurrency investments

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There is no doubt in the fact that cryptocurrency has enormous potential to be a medium that aids in secure financial transactions and accurately verify transfer of assets. However, off late cryptocurrency, and Bitcoin in particular has been in the limelight for all the wrong reasons. Recently, UK’s Financial Conduct Authority (FCA) has put up a statement on its website warning consumers of how they are being scammed using cryptocurrency-related investment schemes.


Also Read: Cryptocurrency and its Relevance in Today’s Day and Age

Since cryptocurrencies like Bitcoin and Ether are not regulated in the UK as of now transfer, purchase and sale of cryptocurrencies fall outside the regulatory limit of the FCA. Cryptocurrency fraudsters are apparently advertising on social media using images of celebrities to promote cryptocurrency investments, which then link to professional-looking websites. Consumers are then persuaded to make investments with the firm using either cryptocurrencies or traditional currencies, says FCA.

Use of Bitcoin for Illegal Actvities


This is not the first time cryptocurrency has been in news for all the wrong reasons. An Australian research group published a paper based on how Bitcoin was being used for illegal activities. Bitcoin was allegedly being used to buy and support illegal drug trade in the notorious online black market Silk Road says the report. Since cryptocurrency is largely unregulated across the world, $72 billion of illegal activity per year involves bitcoin, which is close to the scale of the US and European markets for illegal drugs, says the study.

Darknet markets like Silk Road indirectly promote Bitcoins and other forms of cryptocurrency as they are labelled as ‘virtual assets’. Bitcoins and other forms of cryptocurrency used in dark markets are not clearly or legally classified in almost all parts of the world. The study also claims that cryptocurrencies are transforming the way black markets operate by enabling ‘black e-commerce’.

Use of Cryptocurrency in Terror Funding


Multiple reports claim that cryptocurrency has a high potential to be used in terror funding due to its privacy-focus and emphasis on a decentralized financial ecosystem. Terrorists are apparently seeing cryptocurrency as a means to solicit donations, purchase or sell weapons in the dark web and move funds globally to boost their financial capacities.

An article released by an IS supporter titled ‘Bitcoin wa Sadaqat al-Jihad ‘ (Bitcoin and the Charity of Violent Physical Struggle) advocates the use of Bitcoin due to its decentralized system, mining that goes from one user to another and not through PayPal or eBay and Dark Wallet that is designed to completely hide the activities of the users. The fact that Bitcoin transactions are ‘untraceable’ is what appeals to him the most.

Cryptocurrency Used as Ransom India?

Recent reports regarding a kidnapping and ransom demanded in the form cryptocurrency created a storm in Gujarat. Property dealer Shailesh Bhatt barged into the Home Minister’s office in PM Narendra Modi’s home state, claiming he had been held at ransom by a group of policemen and asked to pay 200 bitcoin, worth around $1.8 million, according to a report on Business Standard. The trial is underway and charges have been filed against 8 policemen.

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