This increased utilisation in illicit transactions is coming after a significant rise in popularity and value of the memecoin in recent years.
According to the blockchain analysis firm, Elliptic in the study report published yesterday:
“While the vast majority of this activity consists of fraud, scams and Ponzi schemes, it also includes the most serious types of crime, including terrorist financing and purveyors of child sexual abuse (CSAM) material.”
The study indicates that the coin is being used by criminals to facilitate vices like fraud, scams, Ponzi schemes, terrorism and the sale of child sexual abuse materials, totaling about 50 cases and running into millions of dollars.
Elliptic found out that cryptocurrency is widely accepted on some popular darknet marketplaces that offer drugs and stolen data.
Some of the illegal schemes include the Plus Token Ponzi scheme, which resulted in the seizure of over $20 million worth of DOGE by Chinese authorities. Also, Dogecoin was used for the theft of $119 million linked to a Turkish Ponzi scheme in 2021.
Interestingly, as of July 2021, DOGE addresses were used to receive $40,235 of the terrorism finance funds going to the Hamas Terror Group. About $3,000 worth of DOGE was also used as payment for child sexual abuse materials.
According to the research, the tenth-largest cryptocurrency based on Market Cap is being leveraged in spreading Cliptomaner – a malware which hijacks computers to maliciously mine cryptocurrencies. The malware hijacks different crypto assets including DOGE which has so far received $29,000.
The elliptic study also says DOGE is used to raise funds for far-right extremist groups, such as Infowars, and has received over $1,700 in contributions.
Illicit activities in crypto
While the rise and further development of crypto are widely celebrated, speculations about its traceability, and its potential to be used in criminal activities, always loom in the horizon.
According to analytics firm, Chainalysis, crypto-based crime hit a new all-time high in 2021, with illicit addresses receiving $14 billion over the course of the year, up from $7.8 billion in 2020.
Earlier in this month, according to an investigative report from Reuters, Binance, the largest crypto exchange in the world, was used as a conduit for money laundering as billions of dollars worth of criminal funds were processed through its platform in the last five years.
Bitcoin, Ethereum and other major cryptocurrencies are usually used for those illicit activities due to their high levels of security and anonymity when used correctly. But bad actors are now expanding to less-known tokens like Dogecoin in a bid to avoid detection.
The adoption of cryptocurrency allows terrorist groups who were otherwise restricted to their region of origin to aggressively pursue expansion into neighbouring regions since the finance will follow them without potentially leaving a trail.
All these problems posed by the underlying qualities by the blockchain technology can be solved through a global regulatory body for crypto.
Although it might not entirely fix the issues, because even traditional finance systems are being used for money laundering and other illegal acts despite their heavy policing units. However, it will still go a long way to address it.
This quote from the Elliptic research validates this assertion:
“For retail investors and exchanges, transparency around Dogecoin ownership and its use have become increasingly important. Although it was originally developed as a joke meme coin, Dogecoin has dramatically increased in adoption and value amongst large businesses, including Elon Musk’s SpaceX, creating a greater need to validate the coin’s origins and payment counterparties.”