The use of Bitcoin mixing services has shot up 2,100% over the past year, according to a report published yesterday by Crystal Blockchain, a research branch of mining company BitFury.

In the first quarter of 2020, darknet entities sent $67 million of Bitcoin to mixing services, up from $3 million the year before. In many cases, this Bitcoin was mixed before sending to exchanges, many of which have increased their verification requirements—needing passports or other personal information from their customers.

“This is likely in response to increased regulation and verification processes for exchanges, leading darknet bitcoin owners toward other services to obfuscate the source of their coins,” the report stated, adding, “This indicates a rapid adoption of crypto mixing services by darknet entities.”

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Darknet users also sent far less Bitcoin directly to exchanges that have such verification requirements, from $53 million to $44 million. It is possible some of the Bitcoin sent to mixing services was then transferred to these exchanges—but hard to tell, because it’s obfuscated by design.

Notably, the amount of Bitcoin sent from exchanges with verification requirements to the darknet doubled in the same timeframe, from $36 million to $73 million. This shows that users are more concerned about sending illicitly gained Bitcoin to exchanges without hiding their origins, rather than sending Bitcoin from exchanges to the darknet.

This may be a response to increased scrutiny of exchanges, which are increasing their focus on blockchain analytics services, which track the movement of Bitcoin and are designed to catch criminals. Recently, Coinbase started offering its in-house blockchain analytics services for sale to the IRS and the DEA—which may have spooked the market.

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