Research from blockchain intelligence firm Elliptic has found that the amount of illicit transactions on the dark web is growing at an annual rate of 50 percent.
The firm, which tracks cryptocurrency and works with various law enforcement agencies like the CIA and the FBI, notes that even though many activities on the dark web are not illegal, a persistent portion consists of drug trafficking, terrorism, money laundering, extortion and child abuse.
Elliptic states that there is a partial misconception about Bitcoin being completely anonymous.
Due to transacting through a blockchain address, there is always a connection between the address and a non-virtual entity.
By studying public Bitcoin blockchain transactions in-depth over time, you can get an idea of who is behind those transactions.
Elliptic uses this data to make a connection between real-world entities and cryptocurrency addresses.
Web-Scraping Research Methods
Elliptic uses web-scraping tools to scan both the dark web and the surface web for information that is available for the public, including cryptocurrency addresses.
Elliptic also draws on court documents and records. Tom Robinson, chief scientist and co-founder of Elliptic, stated to TechWorld that cryptocurrency addresses are often used in prosecution documentation if a suspect is convicted of a cryptocurrency-related criminal activity.
When Elliptic discovers an address by court documentation or web-scraping, they delve into the dark web.
In order to interact with addresses found in their prior research, they create accounts on darknet markets and exchanges to understand how these transactions work.
A team of experts search the dark web constantly to gain insight into how criminals are using cryptocurrency.
They try to recognize the non-risky and risky actors within a cryptocurrency and build a picture of all the transactions.
Studying Transactions with Machine Learning
The company also uses different machine learning techniques to foretell how probable it is that a given cryptocurrency address belongs to a certain real-life entity.
Instead of having to search through thousands of transactions with thousands of addresses used by a darknet market, they look at addresses that are known to belong in the market and use machine learning as a way to discover more associated transactions.
Elliptic also offers investigative and forensic services that are mostly oriented toward law enforcement agencies.
Law enforcement agencies trace the funds into and out of the transactions by looking into detail at one of the addresses.
Elliptic helps them by providing a graphical transaction explorer.
For instance, if an attacker is asking for ransom in Bitcoin, they will use this technique to find out where the ransom payments ends up.
Most of the cases Elliptic has worked on with the CIA and the FBI are confidential, but there are a few publicly known U.K. cases, involving a man importing assault rifles and a dark web drug dealer in Portsmouth.
