The Correlation Between Eastern Europe & Darknet Market

• According to the 2020 State of Crypto Crime report revenue from darknet market has increased sharply
• Chainanalysis estimates, 1.4% of Eastern Europe’s $41 billion 12- month crypto volume is sent to illicit entities.
• It is easy for most Russians to work on digital platforms as most of them use Yandex.Money, WebMoney, QIWI and so on for transaction

In recent years, cryptocurrencies have become a popular tool amongst Corporates, Financial institutions and even cybercriminals. With the market being unregulated, anonymous, it often acts as a bait for them to either mine illegally or hack into users accounts and steal their cryptocurrencies.

According to the 2020 State of Crypto Crime report revenue from darknet market has increased sharply

Revenue has increased substantially from 2013 to 2017. In 2018 it slumped to $430 million and boomed sharply in 2019 to $ 790 million.

The report further indicates that Eastern Europe has become popular in darknet market transactions, sending 100% of hydra’s funds to Eastern Europe.

Chainanalysis estimates, 1.4% of Eastern Europe’s $41 billion 12- month crypto volume is sent to illicit entities. In percentage terms that’s slightly behind Latin America – where 1.6% of total transfer volume is destined for illegal platforms. By Coin Telegraph

 Ukraine and Russia topped the list under Eastern Europe in the darknet market.

Ukraine and Russia top the list with Ukraine at 1^st rank with score of 1 and Russia with 2^nd rank and score of 0.931 respectively.

Russia has sent over $16.8 billion, while Ukraine has sent $8.2 billion and received $8.0 billion according to Chain analysis ()

Chain Analysis further states that the reason for the high exploitation of cryptocurrency in Eastern Europe specifically in Ukraine and Russia are –

• Distrust of the public on government, business and media. According to “2019 Edelman Trust Barometer”

Distrust of the general population for 2019 in Russia on NGOs, businesses, government and media remains low with changes going in the negative direction. Even in case of informed public the trust level is gloomy.

• The people of Russia also have distrust on the banking system of the country because of the financial crisis in the past years. Declining trust on banks is seen in Ukraine too, where several banks have collapsed over the years. This is the reason the usage of cryptocurrency is higher in Russia and Ukraine, as it is outside the ambit of government and central authority.
• Most Russians are educated on the digital transaction methods.

It is easy for most Russians to work on digital platforms as most of them use Yandex.Money, WebMoney, QIWI and so on for transaction. Their risk averse behaviour makes them use the electronic currency dauntlessly, on the other hand most Americans still use the traditional methods of exchanging and storing money.

• According to Coin Desk, cryptocurrency in Ukraine is used widely for making payments. Though there is uncertainty in the regulation of the cryptocurrency. According to Gleb Naumenko, a prominent Bitcoin developer from Ukraine who recently got a $100,000 grant from BitMEX, puts it this way: “Our political situation is somewhat unstable, and Ukrainians are tech-savvy, so this combination creates incentives for people fleeing from fiat to crypto.
• In Russia and Ukraine, people have distrust with the banking system which propels the people to use cryptocurrency, with the wide usage of cryptocurrency the fraudulent activities to some extent are unavoidable.

CONCLUSION

The study concludes that the exploitation of digital platform will continue and the crypto crimes in the near future will continue to rise.

Pratik Chadhokar

Mr. Pratik chadhokar is an Indian Forex, Cryptocurrencies and Financial Market Advisor and analyst with a background in IT and Financial market Strategist. He specialises in market strategies and technical analysis and has spent over a year as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the Financial markets.