Bitcoin has been a revelation ever since its inception. Ever since the seeds of it were sown back in 2009, the tree has continued to grow. It has taken the people who lost faith in fiat currency under its wings and provided them with a shade by virtue of extensive security and anonymity.

As with everything in life, we've to take the good with the bad which is true for bitcoin too. Bitcoin possesses a dark side too which has been a bump in the road of bitcoin growth. Time and time again, bitcoin has been used by the financial Mephistopheles who have taken no prisoners in using the top cryptocurrency in diabolical deeds. The sheer monstrosity of crimes committed via bitcoin has been due to the added layer of anonymity. While it is impossible to remain totally anonymous, there is only an iota of a chance to trace whether a bitcoin is being used for monotonous purposes or malevolent ones.

The most prominent ways in which bitcoin is facilitated to wreak havoc and shake the tree to its foundation are money laundering, bitcoin mixers and Ponzi schemes. While Bitcoin ATMs can be utilized too, the damage done by the above mentioned is much more severe and leaves bitcoin bludgeoned.
<h2>Money Laundering</h2>
Bitcoin has contributed quite significantly to money laundering. So much so that if Jordan Belfort, widely known as the Wolf of Wall Street, the main motivational man and the name on every money laundering aspirant's lips in the '90s makes a comeback in the business, I'm pretty sure bitcoin would be the way to go for him.

The lack of KYC measures, one thing in which the traditional banks lead the race has poured in a lot of nefarious criminals for notorious activities.

The "local bitcoin" exchange plays the hero for these villains. Over here, fiat currency can be deposited for buying or selling bitcoin. The traditional bitcoin transaction fees are 1,2%, whereas the exchange charges a substantial 15% per transaction. However, that is not a turn off as its customers deposit a considerable chunk of their ill-gotten gains on this platform, put it through the wringer, wash away the blemish, rinse off the sins, and bring out bitcoin like they're straight out of a shrine, all holy, almost godly.

Since the birth of bitcoin, it has been estimated that more than $2.5 billion worth of bitcoin has been utilized to launder and carry out evil deeds.
<h2>Bitcoin Mixers</h2>
The criminals then tumble down to tumblers, as the next most desired way to carry out their tasks. The tumblers take a shot in the dark and allegedly clean the tarnished bitcoin by rebounding it between a plethora of addresses, before the amalgamation of the full amount in a tip-top form. As they don't come for free, and the standard fees can range from 1-3%, it makes them a wee-bit tedious, but they are worth their weight in gold in the eyes of the criminals.

Initially, a bitcoin wallet is created on standard internet, and two or more wallets are put up on the darknet. Bitcoin is transferred from a clearnet wallet to a hidden Tor wallet on the darknet, and the exchange can be done plenty of times. These transactions are termed as "hops" and add layers of ambiguity with every hop that is carried out. Once the bitcoin has been loaded in the darknet wallet, it's time to turn to a tumbler which spins up the bitcoin bundle. There are multiple mixing services claiming to be Jack of tumbler trade and charges fees according to the level of anonymity they throw into the "mix".

The bitcoin burst out of the dark wallet to multiple random Tor wallets at different interval times. Ergo, the ability to trace down the bitcoin in profound ways turns vague and gets a tad-bit obliterated.

Once the stains are washed down, bitcoin is blended together once again in Clearnet wallet, and then can be used in exchange for other altcoins or even fiat currency.
<h2>Why Unregulated Exchanges are Enamouring?</h2>
The unregulated exchanges are another breeding ground for bitcoin crimes. These exchanges lack a solid KYC or AML system, which makes it vulnerable and very easy to deceive.

The large loopholes persisting are then exploited by these criminals, and even mixing isn't a necessity for their ecstasy as chunks of bitcoin can be deposited on an exchange and be traded for various altcoins. With each exchange, a hop like coating on the coin is conceived which then conveniently helps in eluding the exchanges.

The user then switches to another platform to withdraw their coin for another one as they can have multiple anonymous accounts as there's no KYC barrier to beat. Even conversion to fiat at times is viable.
<h2>Blowing Things out of Proposition to Land a Blow on Bitcoin?</h2>
Its safe to assume that there's more to it than meets the eye, while what might appear on top as a scathing attack, it is far from it. The arguments in favour, outweigh the arguments against. The question that pops up is just how badly is bitcoin contributing to the illicit business.

Well, honestly not that much, according to an elliptic<a href="https://www.elliptic.co/our-thinking/bitcoin-money-laundering"> study</a>, around $829 million of Bitcoin has been involved in illicit activities as of 2019. While this might be witnessed as a whooping number, interestingly, it is just 0.5% of all bitcoin transactions. The technology on which bitcoin runs, Blockchain maintains an immaculate record of each transaction. The numbers clearly suggest that while there is an underlying problem, the crypto critics tend to blow things out of proportion to suit their agenda.

The mixing services might appear as a mammoth problem, but they are too big of a risk to take, even for criminals who usually don't shy away from putting everything at stake. Researchers have analyzed these mixers and reached a conclusion that no matter how the promises go, even the most prominent mixers have a genuine scarcity of security and privacy.

According to a Clain's<a href="https://blog.clain.io/binance-hack-2019-deep-dive-into-the-money-laundering/"> blog</a>, the mixing can never deliver what they promise simple cause as soon as they make a jump to a large scale money laundering attempt, the burst of flow out of the blue is instantly alerting. The binance exchange scam resulted in 7074 bitcoin getting stolen from it and the scammers are still trying to cash them out. While they are taking baby steps in trading bitcoin, by sending bitcoins in a pack of ten, the researchers have found where the transactions are occurring from.

The illegal exchanges that are used to evade don't fair out well, atleast in the long term. The popping issue for them is that with while they mostly do start out by offering fiat, for unregulated exchanges, this gets curtailed very soon and that puts a crack on the faith criminal initially show.
<h2>Bank's Accusation- a Classic Case of a Pot Calling a Kettle Black?</h2>
The banks make a mockery of themselves when they point fingers at bitcoin. A humongous number of banks have been involved in money laundering cases and drug trafficking, but being the darling of many governments, they get away with murder. Fiat currency still remains the undisputed kings when it comes to crime and out triumphs bitcoin by a landslide. Major banks such as HSBC has paid a massive $1.98 billion for its involvement in Mexican drug cartel's related money laundering case.

<img class="aligncenter wp-image-162920 size-full" src="https://www.cryptoknowmics.com/crypto/wp-content/uploads/2020/03/Money.png" alt="" width="696" /> <a href="https://www.bloomberg.com/news/articles/2019-04-04/global-banks-beef-up-money-laundering-controls-as-fines-sting" target="_blank" rel="noopener"> Bloomberg</a>.

All in all, Bitcoin while not completely stainless, still stacks up better against the banks which are absolutely in no position to raise fingers against the top cryptocurrency. However, there's still work to be done in order to erase the stains on Bitcoin once and for all.

You May Also Read.
<ul>
 	<li><a href="https://www.cryptoknowmics.com/news/canadian-nationals-sentenced-to-jail-for-bitcoin-money-laundering/">Canadian Nationals Sentenced to Jail for Bitcoin Money Laundering</a></li>
 	<li><a href="https://www.cryptoknowmics.com/news/localbitcoins-seller-rhule-charged-with-money-laundering-by-us-homeland-security/">LocalBitcoins Seller, Rhule Charged With Money Laundering by U.S. Homeland Security</a></li>
 	<li><a href="https://www.cryptoknowmics.com/news/dropbit-ceo-charged-with-money-laundering-by-us-authorities/">DropBit CEO Charged With Money Laundering By US Authorities</a></li>
</ul>

Bitcoin Illicit Involvement - a Real Menace or Agenda of Naysayers ?

While there's no doubt that Bitcoin has been involved in illicit controversies, studies suggests that they are not as bad as they are assumed to be.

Zain is a fervid fan of bitcoin and has been meticulously covering the field for a fair amount of time now. An aficionado of Spider man, Liverpool and Slim Shady.

Bitcoin Illicit Involvement - a Real Menace or Agenda of Naysayers ?

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