Cybersixgill’s study indicates that hackers are trying to preserve their stolen money by converting it from cryptocurrencies to fiat currencies, pushing several well-known underground exchanges into bankruptcy.
The exchanges, which operate on the dark web away from the prying eyes of law enforcement, allow criminals to conduct transactions and potentially launder their ill-gotten gains by transferring the stolen funds from fiat cash to various cryptocurrencies — while paying the exchanges steep transaction fees for their discretion.
The exchanges should maintain a healthy balance between fiat cash and cryptocurrencies, with neither being overly in demand. But in light of the more significant decline in cryptocurrency values, that has altered.
According to a blog post published on Thursday by Dov Lerner, security research head at Cybersixgill, “when crypto values collapsed, players rushed to these exchanges to dump it for fiat.” They abruptly ceased operations after running out of their dollar reserves (or because their owners were afraid of suffering losses from purchasing additional cryptocurrency).
This spring, Cybersixgill examined 34 operators running dark web trades and discovered that none of them were promoting their services. Even while several of the actors continued to post on hacker forums, none of them were advertising their exchanges following the early April Bitcoin price collapse.
According to Lerner, starting an underground exchange is not an easy process and needs considerable resources to get off the ground, despite the fact that it operates covertly and gains customers by word-of-mouth in cybercrime forums. Therefore, replacing the failed exchanges won’t be simple, especially while the value of cryptocurrencies keeps falling. Actors must develop a variety of currency reserves and devise payment acceptance methods for multiple platforms, according to Lerner. They must also promote themselves to be found and establish a reputation so that they may be trusted.
The volume of forum posts is another important indicator of how long, if not permanently, the shutdowns will last. A rebrand or relaunch is not anticipated, according to Lerner’s observation that many exchange operators have stopped posting on cybercrime forums after years of doing so virtually daily to sell their services.
Lerner told SearchSecurity that “usually, actors who operate underground stores would promote them regularly on forums, even daily, to guarantee that others are aware of them. “So I believe it’s reasonable to assume that they’re gone if they’re not writing about them anymore.”
According to Lerner, it will be more challenging for fraudsters to move their stolen money around as a result of the exchanges going black. The researcher cautioned, however, that defenders shouldn’t get overly enthused because many of the biggest and most successful cybercrime organisations will probably be able to carry on with business as usual.
In the blog post, Lerner stated that “these exchanges are presumably largely utilised by less skilled operators, who would now be left without a method to shift cash.” We speculate that more sophisticated cybercrime gangs have more intricate means to exchange and launder money, and they will undoubtedly develop ways to do so in the future.
The dark web saw a lot of major bitcoin activity in the spring, and Cybersixgill wasn’t the only merchant to observe it. A research on cryptocurrency mixers, which are intended to conceal bitcoin transactions from governments and law enforcement, was released on Thursday by blockchain analytics provider Chainalysis. Mid-April saw an all-time high for mixer usage, according to Chainalysis, with a 30-day moving average of $51.8 million in bitcoin.
That 30-day average, meanwhile, suddenly dropped to less than $20 million. According to Chainalysis, the increase in activity was mostly caused by cybercriminals and nation-state threat actors like North Korea’s Lazarus Group, who employed mixers to conceal cryptocurrency taken from a variety of victim companies including Axie Infinity game producer Sky Mavis.