When news about Bitcoin being the main factor behind the crackdown on the largest child pornography website broke out, some speculated that this would lead to an increased use of privacy-enhancing cryptocurrencies for illicit activities on the deep web, making it harder for law enforcement agencies to track down the people involved in illegal activities.
In fact, even a recent report by Europol showed that illicit players were slowly but surely adopting privacy-oriented cryptocurrencies such as Monero, even though Bitcoin continued to be the most popular. The report read,
“[…] reported a small shift towards more privacy-focused cryptocurrencies such as Monero, Bitcoin still remains the currency of choice for both legitimate and criminal use. The main developments regarding this trend are on the Darknet markets, several of which also accept Monero, or in some cases exclusively trading in it.”
Jonathan Levin, Co-founder and Chief Strategy Officer of Chainalysis, spoke about the use of privacy coins on platforms like the child porn site, Welcome to Video, on the dark web, in an interview with Laura Shin for Unchained Podcast. Shin asked Levin if the entire investigation would have been possible if the site had used Monero, Zcash or any other privacy coin as the mode of payment. To this, Levin said that it would have indeed been difficult for the investigation if it was a privacy coin, instead of Bitcoin. He said,
“[…] the type of graphic that we put up that shows these direct transactions to the site and really the identification of all of the addresses that belonged to the site do depend on there being a level of transparency into the underlying blockchain. Yes, any form of privacy enhancing technology would have made this investigation more difficult.”
Subsequently, Levin highlighted that Chainalysis has been working on tools that would enable the investigation of crimes using privacy technologies. He stated that the firm had recently announced support for the transparent transactions of Zcash and Dash, adding that it could have been “helpful in this particular instance.” He said,
“We are taking steps towards helping both exchanges and law enforcement manage the risk even in those domains [privacy domains]. It’s still early in the process of how collectively law enforcement and industry can work together to prevent crime in those domains [privacy domains]”
