Blockchain Analytics Counter Telegram Drug And Arms Trade Through Crypto Tracing
For years, illicit trade has been primarily conducted on darknet markets. Silk Road, in particular, emerged as a notorious marketplace for drugs, counterfeit products, stolen data, and even weapons. The darknet’s capacity to facilitate illicit activity on an unprecedented scale was illustrated by its success.
In the present day, Telegram, the public messaging app that is renowned for its emphasis on privacy, has evolved into a platform that enables illicit activities that are comparable to darknet markets. Its accessibility and features, like secret chats and self-destructing messages, have turned Telegram into a magnet for illicit activities and unlawful products.
It has gained popularity as a drug market platform in recent years. It is imperative for a cryptocurrency investigator to comprehend the mechanics of these markets in order to ensure effective enforcement.
The Rise of Telegram Drug Markets
A Fortune study asserts that Telegram, which has a monthly user base of more than 900 million, utilizes end-to-end encryption that “discloses 0 bytes of user data to third parties, including governments.” According to reports, this absence of oversight has resulted in the platform becoming a haven for unlawful transactions, which include the sale of firearms and illicit drugs. For example, it is effortless for users to locate channels that offer stolen identities or fraudulent credentials.
David Maimon, a professor of criminal justice and criminology at Georgia State University has monitored thousands of illicit groups and channels on Telegram since 2019, “Creating a Telegram is easier to do than a Facebook account.” For criminals, “Telegram now is the destination.”
Telegram’s appeal to drug vendors and consumers is derived from its anonymous user profiles and end-to-end encryption. Additionally, Telegram is both user-friendly and broadly accessible, in contrast to traditional darknet markets that necessitate technical expertise to access. Vendors establish channels and groups to promote their products, manage transactions, and post evaluations.
Telegram’s drug trade is comprised of both single-vendor and multi-vendor groups, with the majority numbering over 1,000 members, according to data collected by a single researcher who anonymized themselves and purged all collected data post-research. These groups not only facilitate transactions but also enable customers to exchange experiences, discuss the reliability of vendors, and evaluate the grade of drugs. This public feedback system assists in the identification of reputable vendors and the weeding out of fraudsters.
According to a study cited in the UN report, approximately one-tenth of all internet-using drug consumers between the ages of 15 and 25 purchased drugs online. The majority of online purchases (69 percent in the United States and 86 percent in Spain) were made through social media platforms such as Telegram, with the remaining purchases being made on darknet markets.
CCN.com: Sample where users can purchase drugs using cryptocurrency. Source: Telegram
Teams are frequently employed by larger vendors on Telegram, which include a manager, a primary supplier, an administrator, and shippers. Vendors utilize software to automate orders and payments, and transactions are exclusively conducted through postal services. Cryptocurrency is the predominant payment method, providing security and anonymity. Drop-shipping is a practice in which certain vendors fulfill orders without maintaining inventory, and international shipping is made available.
Cryptocurrencies, particularly Bitcoin, form the backbone of illicit transactions on platforms like Telegram, offering a level of anonymity and security that traditional payment methods do not. This has resulted in them becoming the preferred currency for drug traffickers and other illegal traders. The United Nations Office on Drugs and Crime (UNODC) has reported a substantial increase in the use of cryptocurrencies for illegal activities, such as drug transactions. These platforms interchange millions of dollars annually.
Transactions on these platforms typically follow a straightforward process:
- Advertisement: Vendors post listings with product details and prices in Bitcoin.
- Order Placement: Buyers place orders by sending a message or using automated bots.
- Payment: Buyers transfer crypto to the vendor’s wallet.
- Delivery: The product is shipped, often using postal services to maintain secrecy and reduce the risk of detection.
Combatting Crypto-Powered Drug Trade
Law enforcement agencies combat the illicit use of cryptocurrencies on platforms like Telegram with innovative and multifaceted strategies.
- Blockchain Analysis: Law enforcement agencies utilize blockchain analysis tools like QLUE by Blockchain Intelligence Group to trace Bitcoin transactions. QLUE helps to identify patterns and link them to vendor wallets and networks. According to a study by the European Union Agency for Law Enforcement Cooperation (Europol), illicit activities involving cryptocurrencies account for a significant portion of all digital currency transactions, emphasizing the need for advanced tracking tools and techniques.
- Collaborations: Collaborating with cryptocurrency exchanges is crucial for obtaining transaction records and user information. Exchanges often assist by flagging suspicious activities and providing critical data that can lead to arrests. Through subpoenas and court orders, Exchanges freeze suspicious client accounts and assist law enforcement in seizing the proceeds of crime and illicit activities.
The South Korean police apprehended 70 individuals who were involved in a sophisticated drug trafficking operation that was facilitated through the use of cryptocurrencies. A network that operated on the darknet and platforms such as Telegram, where users could purchase drugs using Bitcoin and other cryptocurrencies, was the target of the investigation.
Investigators use blockchain analytics to trace the movement of cryptocurrencies from one wallet to another. By following the flow of funds, investigators can identify suspicious transactions and potentially uncover the identities of the parties involved, as demonstrated in several high-profile arrests in recent years.
Drug markets penetrated the internet through one of the platforms most dense with users. As a cryptocurrency investigator, navigating these communities and using the right tools to act on suspicious groups and cryptocurrency activities is essential to swift enforcement.
Written By: Omar Marzouk
Writer, Content marketing at Blockchain Intelligence Group
