Research: Cryptocurrency mediated drug trafficking in Russia

Research: Cryptocurrency mediated drug trafficking in Russia



  27 Jan 2019   0

Increased usage of new digital technologies, such as the dark web and cryptocurrencies, has led to digitalization of various crimes, especially illicit drug trading. Using special software, such as the Tor browser, to ensure anonymity and hide their activities, individuals can presently conduct various forms of illegal activities on the dark web, including trading illicit drugs, weapons, and other goods whose trafficking is prohibited globally. Users from Russia are among the world’s most involved participants in the illegal drug trafficking activities taking place on darknet marketplaces.

A recently published paper delves into the dynamics of illicit drug trading facilitated via cryptocurrencies in Russia in comparison with other countries. The analysis presented by the author draws the conclusion that it is not cryptocurrency that increased the magnitude of drug trafficking. Alternatively, cryptocurrency just represents a novel means for generation of criminal income. Throughout this article, we will take a look at some of the interesting information presented via this paper.


The underground criminal activities taking place on the dark web first caught public attention in 2013, when the FBI shut down the Silk Road, which was the first marketplace to utilize the darknet’s innovative encryption and anonymization tools for the facilitation of trafficking illicit goods and services.

Thereafter, in 2017, the collaborative efforts of law enforcement agencies in 30 countries led to the shutdown of another two major darknet marketplaces, AlphaBay and Hansa, via an operation that was named “Bayonet.” The operation also resulted in the shutdown of many other darknet marketplaces. Interestingly, following operation Bayonet, the number of darknet marketplaces increased by 28%, according to a study published by the BBC.

Russians and cryptocurrency:

According to a study conducted by the National Agency for Financial Research (NAFI) in June 2017, 28% of Russians were aware of cryptocurrencies, and of those 39% believed that buying cryptocurrencies is profitable, and 29% thought that cryptocurrency represents a reliable form of currency. The study also concluded that cryptocurrencies are firmly involved in the daily life of Russian society.

The author of the paper believes that cryptocurrency will eventually replace fiat money in Russia in the near future. Despite the current criminalization of the usage of cryptocurrencies in Russia, the author thinks that using and possessing crypto should be among the civil rights of Russians, just as is the case with cash, financial instruments, properties, etc.

Cryptocurrency is nothing more than an innovative form of currency. The usage of cryptocurrency in settlements of drug traffickers did not lead to a rise in the volume of drug trading in Russia – only the methods and payment means have changed. According to the official statistics presented by the Judicial Department of the Supreme Court of the Russian Federation, the number of convicts for crimes related to illegal drug trafficking remained the same throughout the period between 2008 and 2017.

According to data reported by the GAS “Justice” system, during the period between 2015 and 2017, Russian courts issued 86 sentences for illicit drug trading via cryptocurrency. As such, the percentage of illegal drug trading crimes is negligible. However, can these numbers be considered reliable given the fact that the identification of such crimes is extremely difficult for law enforcement agencies?

The anonymity offered via cryptocurrency and the Tor network gives reasons to conclude that the detected crimes in Russia represent just the tip of the iceberg. How can this compare with the situation in other countries?

Studies conducted by the Global Drug Survey show that the overall number of drug users is increasing globally. With increasing popularity of darknet marketplaces, approximately one third of drug users in Europe obtained their drugs via crypto markets in 2016. Even with the presence of fraudulent crypto markets and the sudden shutdown of others, the enthusiasm of drug users for buying their drugs over the darknet did not diminish. This is because darknet marketplaces offer a wide range of products, qualities, and convenience of choice, in addition to hiding illegal activities from the preying eyes of law enforcement agencies.

Illicit drug trafficking via cryptocurrency and the Russian law:

According to Russian law, a sophisticated scheme for extraction of criminal proceeds from the trading of illicit drugs via cryptocurrencies indicates the presence of guilty persons under Act 228.1. These provisions are compliant with the explanation included in paragraph 11 of the decision of the Plenum of the Supreme Court of the Russian Federation from 07.07.2015 No. 32, “On Judicial Practice in Cases on legalization (laundering) of funds or other property acquired in a criminal way, and on the acquisition or sale of property knowingly obtained by criminal means.”

The problem lies in the fact that the Russian law did not consider cryptocurrency a form of currency that can be a source for criminal income. However, benefiting from the foreign experience in confiscating cryptocurrency wallets and their private keys in Russia will help in damaging criminal activities and undermining existing impunity.

Final thoughts:

The data presented via this paper denotes that cryptocurrencies did not increase the number of crimes related to illicit drug trading, instead they only made crime easier to conduct, via rendering it contactless. Unfortunately, there is no clear fight against crypto markets in Russia, as evidenced by the low number of convicts of such crimes. The bottom line is more efforts should be deployed to identify illicit drug trading via crypto markets in Russia.

.towauthorscopyaddress p { -webkit-user-select: all; -moz-user-select: all; -ms-user-select: all; user-select: all; overflow-x: scroll;

Source: TheOnionWeb

Leave a Reply