DEA: Speculators, not criminals, top bitcoin use now

The ratio of legal to illegal activity in bitcoin has flipped, according to Lilita Infante at the U.S. Drug Enforcement Administration.

When Infante started seeing the bitcoin pop up in her cases at the DEA five years ago, her analysis of blockchain data showed criminal activity was behind about 90 percent of transactions in the cryptocurrency. Now, illegal activity has shrunk to about 10 percent, and speculation has become the dominant driver, she said.

That doesn’t mean criminals stopped using bitcoin. Total transaction volume associated with illegal uses has surged since 2013, said Infante, who is a DEA special agent and part of the 10-person Cyber Investigative Task Force. The team focuses on dark web and virtual-currency related investigations and collaborates with other Department of Justice units, including the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

“The volume has grown tremendously, the amount of transactions and the dollar value has grown tremendously over the years in criminal activity, but the ratio has decreased,” she said in an interview at her office in Weston, Florida. “The majority of transactions are used for price speculation.”

Infante’s findings contradict the popular perception that bitcoin is mostly being used by criminals such as the notorious Dread Pirate Roberts, but also show that the underground market is one of the biggest groups of people using bitcoin for its actual features rather than its price gyrations. Transactions are pseudonymous, so not easily traceable, while a decentralized ledger eliminates the need for banks and governments, and also means there’s no company that can be subpoenaed in an investigation.

Infante said criminals will likely continue using cryptocurrencies, but that’s fine with her.

“The blockchain actually gives us a lot of tools to be able to identify people,” she said.