Lurking in the Dark Web: Bitcoin and Criminal Entrepreneurs

Mr Aaron Lane1, Ms Lisanne Adam1

1RMIT University, Melbourne, Australia

The pseudonymous nature of cryptocurrencies has made it an attractive method for criminals to exchange goods and services over the Dark Web. Bitcoin, the original and most popular form of cryptocurrency, launched in 2009 as a distributed peer-to-peer digital currency that does not rely on central banks or financial intermediaries (Nakamoto 2008). In applying Institutional Cryptoeconomics theory (Berg, Davidson, Potts 2019), the presenters predict that criminal entrepreneurs will perceive Bitcoin and cryptocurrencies as reducing the transactions costs of facilitating illegal exchanges. Such transaction costs include the enforcement of transactions with counter-parties, being subjected to financial intermediaries reporting requirements, and the probability of being detected by law enforcement agencies. A review of Australian case law over the last decade confirms that early adopters of cryptocurrencies included those using this new technology for illegal purposes. The presenters will provide a comprehensive analysis of the Australian cases, showing that the bulk of the reported cases are sentencing remarks where the defendant has plead guilty to the offence. The offences are mainly related to the importation of border-controlled substances, including illegal drugs and weapons. The analysis in this presentation shows that the defendants’ use of cryptocurrencies can contribute to the level of sophistication of the offence – becoming an aggravating factor in sentencing. The presentation concludes by discussing the legal and evidentiary issues that may arise in future contested criminal matters involving the use of cryptocurrency.


Biography:

Aaron Lane (LL.B.(Hons)) is a Lecturer in the Graduate School of Business and Law at RMIT University, and an affiliated researcher with the RMIT Blockchain Innovation Hub.

Lisanne Adam (LL.M.) is a PhD candidate in the Graduate School of Business and Law at RMIT University. Her research focuses on criminal justice, criminology, and forensic psychology.

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