Drug Money and the Rise and Rise of Bitcoin

[ssuchy]

1. To launder that much money, you'd have to be moving a LOT of bitcoins. Regularly. If the total market cap of crypto is only 165 billion, and of that only 94 billion, we're talking about very noticeable amounts being laundered. Even taking into account a $5000 Bitcoin value, to move 1 million dollars requires 200 Bitcoins. And we know the industry is moving hundreds of millions a month. Those Bitcoin volumes moving into USB wallets are going to be very easy to detect. Getting someone to SELL you those Bitcoins is going to be hard to find. Exchanges as we know them are going to be very difficult as well.

See, if you're moving millions of fiat in a global market of 100s of trillions, it's a speck. Perhaps when Bitcoin is valued at 100,000, it may become more viable.

This. It's easier to launder money through a legit business, or use cash, than bitcoin. Bitcoin is too small, and the public ledger means that if your address is tied to a persona, you are toast.

Guys, I would not even have thought about what Bitcoin could be related to drugs or trading a weapon. You should understand that such events can only harm us and the whole of the Crypto-currency. Another would not be enough to see the crypto currency in financing terrorism. Then I think that the whole world can oppose the crypto currency in general. This is even frightening to think about.

[JimboToronto]

The entire market cap of Bitcoin is less than $120B.

That's including Satoshi, the Winks, Ver and all the other whales, the banks, the exchanges, and all the smaller holders.

Even if the cartels held 10% of all the existing bitcoins, that would be only $12B, small potatoes in the world of drug cartels.

I'm sure some have acquired Bitcoin or use it to move their money around but I don't think it represents a big part of either their business or of Bitcoin itself.

There's also the security aspect. The druglords aren't stupid. They know the blockchain is a permanent record of all transactions.

Bitcoin is merely pseudonymous, not anonymous. One little slip-up and there's a ton of forensic evidence against them.

[TravelMug]

Ok, I know you're probably saying 'WTF man!', but here me out because it could be plausible.

I just saw the movie called 'American Made'.  It's about this pilot named Barry Seal who smuggled drugs for Pablo Escobar, and then guns for the CIA.  The thing is he made a lot of money that...  Like 'he doesn't know where to put them' a lot...  He buries bags full of cash in his backyard ffs, just like how Escobar did it.

Anyway, then I thought, it would be cool if Bitcoin was around during that time because they could easily store all that value in a USB drive.  Lol.

Then it occured to me...  Drug cartels today are bigger and better, what's stopping them from buying all the BTC they can get their hands on?

What do you guys think?

Yeah mate, if would be cool if those bastards would just have a USB on their pocket worth billions of dollars. hahahaha. However, they don't trust anyone specially bitcoins. They would rather have stash them somewhere like in their own backyard wherein they known that no one can touch them except themselves. And they are paranoid. They will probably check every minute if they still have their money on their wallet. So I have doubts that they will just buy bitcoin to hide all their money. And I think the circle of advisers would go against it because bitcoin can be traced in blockchain and the authorities can easily tracked it.

[mrcash02]

They can be using it right now and no one here knows... Nothing is stopping them to use Bitcoins, it surely can help thieves to make their deals around the world, but if they are on the target of authorities they can be tracked and found. The question is: What is stopping authorities to arrest the big cartels and destroy the drug's market?

[migolmigol]

Nothing. And this is actually the reason why the government questions the Bitcoin because it is a mean of money laundering and illegal transactions. But Bitcoin did not made the illegal business big, because without Bitcoin, these drug lords will still do this and continue the business.

[Pursuer]

I love google: https://www.google.com/search?q=how+much+money+does+drug+cartel+make
it tells me they are making $39 billion in a year and that is for 2008 (2009 reporting last year). the volume that goes in and out of bitcoin is not even close to that number.
if 30-40 billion dollar were to be injected in bitcoin, price would have been at $1,000,000 already. not to mention that all the drug lords would have been behind bars since all their money could have been traced easily.

[ekoice]

It was in earlier days of bitcoin that silk road and dark markets adopted bitcoin for their illegal activities.But now,they have other ultimate choices like monero and zcash for such purposes since they provide full anonymity and bitcoin is pseudo anonymous.

Drug dealers won't be willing to risk by dealing their business with bitcoin payments as it could be easily traced.Now,bitcoin is widely used for various purposes like trading,sending huge amounts of money,buying goods,etc.Bitcoin has diversified uses.

[tokeweed]

I love google: https://www.google.com/search?q=how+much+money+does+drug+cartel+make
it tells me they are making $39 billion in a year and that is for 2008 (2009 reporting last year). the volume that goes in and out of bitcoin is not even close to that number.
if 30-40 billion dollar were to be injected in bitcoin, price would have been at $1,000,000 already. not to mention that all the drug lords would have been behind bars since all their money could have been traced easily.

But hear this, not all that 39 billion will be going in Bitcoin, just enough to keep making it rise to new ATH.  If banking executives at the top help launder the cartels' money, it wouldn't be too farfeched to have an exchange (BTCe) used by money launderers (that Alex guy) to get drug money in and out of BTC.

There's even a rumor back in the day that Litecoin was being used to launder Yuan. 

[Opquar]

The transparency of transactions kind of hurt them. If you were dealing drugs in a small scale then I'm sure law enforcement agencies are not going to spend too much resources on you, but once you start dealing with that amount of money, you're going to be on their radar relentlessly.

[arseaboy]

The transparency of transactions kind of hurt them. If you were dealing drugs in a small scale then I'm sure law enforcement agencies are not going to spend too much resources on you, but once you start dealing with that amount of money, you're going to be on their radar relentlessly.

I'm not sure with your point mate how can they track you out if you are using bitcoin? unless you keep exchanging it to your local fiat and your local exchange
would be able to review your transactions, but if the drug dealer transact only with direct btc and no government can track them out aside from the hackers
who's keeps on looking for the possible victims.

[buwaytress]

The transparency of transactions kind of hurt them. If you were dealing drugs in a small scale then I'm sure law enforcement agencies are not going to spend too much resources on you, but once you start dealing with that amount of money, you're going to be on their radar relentlessly.

I'm not sure with your point mate how can they track you out if you are using bitcoin? unless you keep exchanging it to your local fiat and your local exchange
would be able to review your transactions, but if the drug dealer transact only with direct btc and no government can track them out aside from the hackers
who's keeps on looking for the possible victims.

We can't know for sure how, but the FBI and Interpol have revealed that it was precisely because darkmarket traders used Bitcoin that they were more able to track down people. Even as early as 2013/4, journalists themselves were already able to track down and identify known addresses of traders with the most basic tracking tools. The basic idea is, if you follow every transaction, you can trace all the inputs and outputs in a chain until you eventually arrive at a known address or one that is associated with the activity.

Yes, there are so many variables, and traders tend to use mixers/tumblers heavily to mask and obfuscate their coins, but eventually, everything is somehow linked. All it takes is a trader to get careless once. Perhaps send his address by email revealing his email server IP. Perhaps by cashing out even once at an exchanger with a verified phone number that can then be tracked with GPS. The software enforcement is using now is clearly powerful enough to track them down even with heavy mixing use.

[Ayiranorea]

One cannot make such a big transaction for buying large volume of bitcoin. Even after certain number of bitcoin purchases we are supposed to cope with the KYC norms. Even now people keep hold of black money, but they fear of transacting it through bitcoin or convert and keep hold in the form of bitcoin. This is all because of the system where he gets caught in one way or the other.

[trickyriky]

I love google: https://www.google.com/search?q=how+much+money+does+drug+cartel+make
it tells me they are making $39 billion in a year and that is for 2008 (2009 reporting last year). the volume that goes in and out of bitcoin is not even close to that number.
if 30-40 billion dollar were to be injected in bitcoin, price would have been at $1,000,000 already. not to mention that all the drug lords would have been behind bars since all their money could have been traced easily.

Super interesting post just to imagine how much potential have bitcoin and others cryptoes!
Any value coin can easily rise 1000x in time.

[949miner]

Maybe it is because i watch a lot of series, but yes, it is happening, a lot of drug dealers are paying and receiving money by bitcoin because it is very easy to launder that money, and for getting paid with it of course.
And those who want more anonymity, are using Monero, because it is 100% untraceable.
But if a giant cartel puts their funds in here, they will only increase the marketcap by a few millions, and it wont make any difference on the price after all.

[spngebob]

Who knows.
I don't think drug cartels need bitcoin they always find a way how to launder paper money, and not to mention some cartels don't even have to launder money because their country is corrupted from bottom to top.
Besides, exchanges could simply take their funds if they find anything suspicious, unless they are running exchange themselves and in that case it would be simple for them to launder money trough bitcoins, but still it doesn't explain bitcoin spike.

[Beerwizzard]

The movie is cool but it is pretty far from the current situation. Nowadays every major BTC operation would be notified by the government, you still can't buy anything for bitcoins (ofc you can but if you have a huge amount in BTC then you won't find a good usage for it) and you cant exchange big amounts of BTC. You gona have the same situation as a guy in a movie but you won't have to hide your money.
Also I don't think that cartells are causing this pump simply because they are not that stupid and they should have their own financial specialists. Right now bitcoin in in the bubble and it won't be a smart move to buy big amounts of BTC on the top of the bubble.

[marcuslong]

Yes Drug money are into bitcoin too here in my country they use bitcoin as a payment gateway and also those big fishes they are using bitcoin to pay drugs online and it will be delivered at the clubs i don't know why people are always find there way to sell drugs even in online i see lots sellers now who accept bitcoin lmao.

[wywialm]

Hey tokeweed, I'm hearing you out! Here's my take on it, after seeing several discussions and thinking about it myself.

1. To launder that much money, you'd have to be moving a LOT of bitcoins. Regularly. If the total market cap of crypto is only 165 billion, and of that only 94 billion, we're talking about very noticeable amounts being laundered. Even taking into account a $5000 Bitcoin value, to move 1 million dollars requires 200 Bitcoins. And we know the industry is moving hundreds of millions a month. Those Bitcoin volumes moving into USB wallets are going to be very easy to detect. Getting someone to SELL you those Bitcoins is going to be hard to find. Exchanges as we know them are going to be very difficult as well.

See, if you're moving millions of fiat in a global market of 100s of trillions, it's a speck. Perhaps when Bitcoin is valued at 100,000, it may become more viable.

2. It didn't take long for the FBI to track down dark markets who went through the trouble of mixing, remixing and anonymising their transactions... on a volume far smaller than drug cartels. What this tells us is that the tracking software has become very sophisticated.

I believe the technical knowledge required to hide and launder Bitcoin, being a non-anonymous public ledger and all that, is a deterrent to major organised crime to using crypto. They've got great accountants schooled in conventional finance, but not yet the skilled programmers who would help them use crypto to their needs.

However, due to ETH's architectural difference (and Monero's), illegal activities are moving towards them and it may well be that they could be used chiefly for these. Research already shows Bitcoin illegal use dropping sharply, and is predicted to be less than 5% of volume end of this year.

3. Most likely, they haven't heard about Bitcoin yet or don't know yet how to use it. Somewhat related to (2)... but you know, these guys are probably unimaginably removed from our world of computers and digital tech. Call it a deeply-ingrained culture of paranoia!

This is a very good explanation.

Indeed, trade in illicit goods was a driver of bitcoin price a while ago (at the times of Silk Road, where you had to have btc to trade), now it is negligible.

[tokeweed]

1. To launder that much money, you'd have to be moving a LOT of bitcoins. Regularly. If the total market cap of crypto is only 165 billion, and of that only 94 billion, we're talking about very noticeable amounts being laundered. Even taking into account a $5000 Bitcoin value, to move 1 million dollars requires 200 Bitcoins. And we know the industry is moving hundreds of millions a month. Those Bitcoin volumes moving into USB wallets are going to be very easy to detect. Getting someone to SELL you those Bitcoins is going to be hard to find. Exchanges as we know them are going to be very difficult as well.

See, if you're moving millions of fiat in a global market of 100s of trillions, it's a speck. Perhaps when Bitcoin is valued at 100,000, it may become more viable.

This. It's easier to launder money through a legit business, or use cash, than bitcoin. Bitcoin is too small, and the public ledger means that if your address is tied to a persona, you are toast.

Or set up a Bitcoin exchange operated by 'anonymous' people, just like what Alex Vinnick did.  And I wouldn't be surprised if some of the other 'legit' exchanges are being used to launder drug money.  If bank executives at the top do it, then Bitcoin exchanges are the cheaper option.  It would be naive to think no shenanigans are going on in the space.

Criminal Mastermind' of $4bn Bitcoin Laundering Scheme Arrested
https://www.theguardian.com/technology/2017/jul/27/russian-criminal-mastermind-4bn-bitcoin-laundering-scheme-arrested-mt-gox-exchange-alexander-vinnik

[Erkallys]

It is something sure at 100% that there is illegal money flowing into Bitcoin, it is just a miraculous tool made for them. However, I doubt it is the reason behind the current rise, because it is probably somehow isolated and probably not a big-scale trafic. But I might be wrong. The principle of those groups is that we can not know what they are doing.