Eastern Europe Actively Using Crypto for Illicit Purposes: Chainalysis

A significant amount of cryptocurrency activities in the Eastern Europe is related to the dark market and ransomware, according to a Chainalysis report.

AccessTimeIconSep 15, 2020 at 3:41 p.m. UTC
Updated Sep 14, 2021 at 9:56 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

A significant amount of cryptocurrencies passes through dark web marketplaces in Eastern Europe, according to Chainalysis.

  • Eastern Europe is actively using crypto for illicit purposes, the blockchain analytics firm said in a recent report. Out of $41 billion in total transaction volume, 1.4% was sent to various "illicit entities," the second-highest share in the world after Latin America.
  • "In fact, Eastern Europe accounts for more global darknet market activity than any other region," Chainalysis said in its report, "Eastern Europe: High Grassroots Adoption, Outsized Darknet Market and Ransomware Activity."
  • Most of that activity occurs on the Hydra Marketplace, which, by Chainalysis' estimate, is the sixth-largest service by cryptocurrency volume in the region – "no other region has a darknet market or other illicit service in its top ten services," the firm said in a blog post.
  • Hydra is a popular drug-selling marketplace that also provides other kinds of illicit goods and services such as fake IDs. Hydra famously announced an initial coin offering (ICO) in December 2019. In June, the ICO was postponed indefinitely due to the COVID-19 pandemic.
  • Eastern Europe also leads the world in ransomware, Chainalysis said. More than 23% of funds received from ransomware addresses were linked to the region. The possible reason, according to the report, is the combination of lower economic opportunities, government sponsorship of hacking activities and high tech literacy among the youth.
  • Eastern Europe include two countries that lead the world in crypto adoption: Ukraine and Russia, as CoinDesk previously reported. Although these countries don't show the largest crypto trading volumes, the population there is actively using crypto and trading it peer-to-peer, Chainalysis said.

    Read more: Ukraine Leads Global Crypto Adoption, Chainalysis Says in New Report
  • For example, user base of the p2p exchange Paxful reported its user base in Russia has grown 350% during the COVID-19 pandemic.
  • During the past year, Russia has sent over $16.8 billion worth of cryptocurrency and received $16.6 billion while Ukraine has sent $8.2 billion and received $8 billion, Chainalysis estimated. This is much lower than China, the U.S. and some other countries show. However, relative to those countries' economies and internet users numbers, these crypto volumes are significant, according to Chainalysis.
  • Roughly 85% of all transaction volume in the region during the past year were "professional-sized transfers of over $10,000 worth of cryptocurrency," Chainalysis said. This, again, is significantly less than in North America and northern and western Europe. However, there are large crypto investment enterprises in Eastern Europe, and Chainalysis names ITI Funds, one of the participants in Telegram's TON token sale in 2018.
  • Chainalysis has been gradually releasing excerpts, including this newest one, from its "Geography of Cryptocurrency Report."

    Read more: Chainalysis Report Shows Healthy Crypto Usage in Venezuela

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.