Wasabi, the Bitcoin mixer wallet, is on Europol’s radar for a ‘significant amount’ of dark web transactions

30% of the privacy-focused tool’s deposits come from dark web market, says leaked report

Open-source Bitcoin privacy wallet, Wasabi, has come under the lens of Europol, the European Union’s law enforcement agency. The privacy-focused Bitcoin wallet is being investigated for facilitating dark web transactions, confirmed the leaked two-part report by Europol’s European Cybercrime Centre (EC3).

The internally presented two-part report primarily analysed the wallet’s use for criminal activity. Released in April this year, the first part of the report stated that Wasabi has come to its attention due to the high percentage of deposits coming from dark web markets “According to Chainalysis, over the last three weeks, BTC in the amount of nearly 50 million USD were deposited into Wasabi with almost 30% coming from dark web markets,” the report argued. “This is a significant amount, relatively speaking, given the dark web transactions are estimated to have only a 1% share of total transactions,” it added.

The second part of the intelligence briefing delved into how the law enforcement agency can detect a Wasabi transaction on the blockchain and whether attempts to demix it would be successful. “Things are not looking good,” the report stated implying that it is not easy to trace Bitcoin transactions taking place via Wasabi wallet. “The sheer amount of transactions and uniform output amounts, typically offer too many options of where the funds could have moved. Still, there may be a glimpse of hope if the suspect makes a mistake and decides to group the mixed coins together,” said the report.

EC3, Europol’s specialised department to combat crime in the digital age, also noted that the wallet’s use of anonymisation methods for Bitcoin transactions and integration of TOR software, safeguard the Bitcoin mixer from certain anti-money laundering regulations.

The report marked “for law enforcement only” was leaked on Telegram recently, after which the Europol press department confirmed its authenticity. When questioned about the probability of demixing Bitcoin transactions via Wasabi, the press department stated that “realistically speaking, in most cases the answer is negative.”

According to Bitfury’s crypto analytics unit Crystal Blockchain, the share of Bitcoin sent to mixers has indeed increased from 1% in Q1 of 2019, to 20% in Q1 of 2020.

The situation presents a long-standing dispute between government agencies across the world and Bitcoin privacy advocates.  While law enforcement agencies repeatedly insist that blockchain technology has facilitated crimes and made it increasingly difficult to track them, privacy advocates argue that the system must be made harder to trace in order to increase reach as a matter of principle.

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