Digital currency ATMS ‘increasingly used for money laundering’ in US drug market: DEA

Digital currency ATMs are being increasingly used to launder the proceeds of the drugs trade, according to a report published by the U.S. Drug Enforcement Administration.

In a new report, the law enforcement agency said drug traffickers were turning to digital currency ATMs as a way of illegally transferring money to avoid detection.

In particular, the report highlights a surge in withdrawals of BTC from dark web merchants in 2020, which is thought to have been a response to concerns over “loss of funds” due to fluctuations in digital currency prices.

The DEA also noted that COVID-19 lockdown restrictions had led to some shipments being delayed, resulting in funds being held for longer in escrow—and therefore subject to greater exchange risk against fluctuating cryptocurrency markets, before dealers were able to cash out.

Enhanced border restrictions between the United States and Mexico over the pandemic are also thought to have played a role, with disruption to physical cash flow routes pushing more organized criminals to digital currency and ATMs as an alternative.

Instead of holding cash, digital currency allows dealers to send virtual currency instantaneously, minimising the risks of holding and moving large amounts of fiat currency.

According to the DEA, some $1.7 billion in digital currency was spent on online darknet markets in 2020, of which illegal drugs form a significant part.

AVAILABLE NOW! #DEA’s 2020 National Drug Threat Assessment a yearly review of the challenges communities face related to drug abuse & drug trafficking. Highlights include usage & trafficking trends for Rx, illegal & synthetic drugs, & the effect of #COVID19 during early 2020.

— DEA HQ (@DEAHQ) March 2, 2021

The news sees the DEA become the latest agency to flag concerns over the illicit use of digital currencies like BTC in the U.S., which has become the currency of choice for organized criminals. It remains to be seen whether the report will influence policy towards digital currency ATMs, which remain operational across the U.S. and beyond.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups-from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.