Darknet markets are increasingly adopting Bitcoin as their primary cryptocurrency after major exchanges delisted privacy-focused coins like Monero, according to cybercrime researchers. The shift represents a significant reversal in illicit transaction trends as accessibility issues plague coins designed specifically for anonymity.
What to Know:
- Daily Monero transactions have decreased by 50% compared to last year following delistings from major exchanges
- Only 0.14% of all cryptocurrency transactions (approximately $50 billion) involve illicit activity
- Law enforcement prioritizes targeting darknet markets based on scale and involvement in fentanyl trade
"After major exchanges delisted XMR, we observed a significant increase in Bitcoin inflows," said Eric Jardine, cybercrime research lead at Chainalysis, in an interview. "Reduced accessibility is steering users back toward bitcoin."
The underground marketplaces, accessible only through specialized anonymity tools, had largely embraced Monero as their preferred payment method before recent regulatory pressures forced changes. Many Western darknet markets had either completely migrated to Monero or operated dual systems alongside bitcoin before the delistings prompted a strategic retreat.
XMR usage notably declined after OKX removed it and other privacy-focused tokens including dash and ZCash in late 2023. Binance, one of the world's largest cryptocurrency exchanges, followed suit in February 2024, announcing plans to delist Monero.
"When a coin or token no longer meets this standard, or the industry changes, we conduct a more in-depth review and potentially delist it," Binance stated at the time of its announcement.
On-chain data supports this trend, with BitInfoCharts showing the daily number of Monero transactions has dropped to half of what it was during the same period last year. The dramatic decrease highlights the real-world impact exchange policies have on cryptocurrency adoption patterns, even within illicit networks.
Jardine explained the practical reasoning behind the shift. "In order to be an effective kind of medium of exchange, you need a certain amount of liquidity and a certain amount of accessibility," he said. The underground economy, despite operating outside legal boundaries, still follows basic market principles regarding currency selection.
Cryptocurrency Crime Landscape and Enforcement Response
Despite concerns about cryptocurrency's role in illicit activities, Jardine emphasized that illegal transactions represent a small fraction of the overall market. "Typically, illicit transactions constitute at or below 1% of total crypto activities. While addressing these issues is essential, broadly labeling crypto negatively is inaccurate and counterproductive," he noted.
According to Chainalysis data, approximately 0.14% of all cryptocurrency transactions involve illicit activity, totaling about $50 billion. Researchers have also identified a growing trend of stablecoin usage in illegal payments, marking another evolution in darknet market practices.
The cryptocurrency industry has begun self-policing efforts to combat illicit usage. The Tron-led T3 Financial Crime Unit, a collaborative initiative between Tron, USDT-issuer Tether, and TRM Labs, has already frozen over $100 million in funds linked to illegal activities.
Law enforcement agencies maintain strategic priorities when targeting darknet markets, focusing primarily on their size and involvement in specific trades.
Jardine noted that fentanyl sales significantly increase the likelihood of markets attracting law enforcement attention, as combating the deadly opioid remains a high priority for international agencies.
"Markets have sort of varying levels of sensitivity to fentanyl-related sales," Jardine explained. "Some claim they don't do it, then don't police vendors; some claim they don't do it, but then they do. Some will be selling precursor products but not finished products."
The connection between cryptocurrency and fentanyl distribution was highlighted in a recent enforcement action against the Nemesis online market. The U.S. Department of the Treasury's Office of Foreign Assets Control specifically cited the market's role in fentanyl trafficking as justification for the operation.
Following the Nemesis takedown, authorities sanctioned numerous cryptocurrency wallets tied to its alleged operator, Behrouz Parsarad, including 44 Bitcoin addresses and 5 Monero wallets. The sanctions demonstrate that while privacy coins may offer additional anonymity features, they don't provide immunity from law enforcement actions.
Closing Thoughts
The return to Bitcoin by darknet markets illustrates how regulatory pressures and exchange policies can reshape even illicit economies. Despite the cryptocurrency industry's efforts to distance itself from illegal activities, the complex relationship between privacy, accessibility, and enforcement continues to evolve as all parties adapt to changing conditions.