Dogecoin (DOGE) is increasingly linked to illicit activities, including pyramid schemes, terrorist financing and child sexual abuse (CSAM) materials. At least that’s the conclusion of a new report published by blockchain analytics firm Elliptic. According to the report, the growing popularity of the meme cryptocurrency, in addition to legitimate investors, has also caught the attention of criminals, as “millions of dollars worth of dogecoin transactions connected to illicit activities” have been identified. “While the vast majority of this activity consists of fraud, scams and pyramid schemes, it also includes the most serious types of crime, including terrorist financing and sellers of child sexual abuse (or CSAM) material,” Elliptic explained.
Overview of the illicit use of dogecoin (Image: Elliptic) Highlighting the “growing adherence” of dogecoin to the financing of terrorism, the report cited a July 2021 confiscation order of 84 crypto addresses carried out by the Israel National Department to o Combating the Financing of Terrorism. The department believed these addresses were linked to the radical group Hamas or used in terrorism-related activities. Among the crypto addresses were wallets that contained more than $40,000 in DOGE. The report also flagged a “small but growing number” of CSAM sellers operating from both the dark net and the regular internet and receiving payments in dogecoin. Although, in this case, the amount of dogecoin identified by Elliptic is low — less than $3,000 — analysts warn that it highlights an “appetite by criminal actors to adopt a wide variety of cryptocurrencies in an attempt to go unnoticed.”
Elliptic has identified millions of dollars worth of Dogecoin transactions connected to illicit activity including terrorism financing and vendors of child sexual abuse material (CSAM). https://t.co/a4x5pD1nuC#doge— elliptic (@elliptic) June 21, 2022
Scams and Pyramid Schemes
The “highest high-profile” crime related to dogecoin, according to Elliptic, are robberies, scams and pyramid schemes. According to the company, so far, it has identified more than 50 examples of robberies, frauds and pyramid schemes that have helped criminals profit “hundreds of millions of dollars in dogecoin”. These include the $6 billion PlusToken Ponzi scheme, which resulted in the confiscation of over $20 million in DOGE by Chinese authorities in 2020 and an alleged theft of $119 million in dogecoin linked to a Turkish Ponzi scheme. 2021.
Far-right extremists embrace cryptocurrencies
Far-right extremist groups — when excluded from traditional fundraising methods — have also turned to cryptocurrencies, including dogecoin, according to Elliptic. According to the company, they include several news sites, blogs and platforms for sharing far-right videos. A news site called Infowars, which claims to be “fighting globalism and promoting a pro-human future around the world,” has so far raised more than $1,700 (or £1,383) in dogecoin. Elliptic’s findings mirror those of the Financial Action Task Force (or FATF/FAFT) which, in 2021, reported that far-right groups are increasingly turning to cryptocurrencies, including bitcoin (BTC) and privacy coins. Dogecoin, which in recent months has been heavily promoted by Tesla CEO Elon Musk, is the 10th largest cryptocurrency in the world with a market capitalization of $8 billion. *Translated by Daniela Pereira do Nascimento with permission from Decrypt.co.