Europol identifies Wasabi and Samourai Bitcoin wallets as key darknet threats

The growing popularity of Wasabi and Samourai Bitcoin wallets with coin-mixing capabilities significantly complicates the tracing of darknet activity. The finding is contained in the report from the European Union Police Service (Europol) on internet-related threats.

Both wallets use CoinJoin technology to anonymize Bitcoin transactions.

“Improved wallet capabilities based on the CoinJoin concept have become a major threat alongside centralized mixers,” Europol notes.

The report notes that wallets offer additional features beyond simple CoinJoin integration and the Tor network:

“Samourai, for example, offers remote SMS commands that can delete information. These wallets do not necessarily sever the link between the origin of funds and their destination, but they certainly complicate tracking of cryptocurrencies.”

Law enforcement notes that administrators of some darknet marketplaces are attempting, by default, to integrate CoinJoin-enabled wallets as a payment option. The share of users using hardware wallets is rising. Some platforms employ multi-signature addresses or crypto payment systems without wallets.

In addition to the growing popularity of Bitcoin wallets with CoinJoin, the report authors note a rising demand for Monero, focused on enhanced cryptocurrency privacy.

What is Monero (XMR)?

The report notes lower popularity of Litecoin, Ethereum, Zcash and Dash on darknet markets.

“Bitcoin remains the most popular payment method. Mainly due to broader adoption, reputation and ease of use. The use of privacy-focused cryptocurrencies has risen, though not as much as its proponents expected,” the document says.

Earlier, Litecoin developers launched a testnet for the MimbleWimble protocol aimed at increasing privacy. It uses Confidential Transactions technology, which completely eliminates inputs and outputs by implementing multi-signatures. Litecoin’s lead MimbleWimble developer, David Burkett, expects protocol activation in 2021.

Europol specialists also note a rise in decentralization of the darknet ecosystem. The report notes an increase in the number of small marketplaces focused on specialized features and offerings for their users. The relatively short lifespans of such markets pose a challenge for law enforcement.

In September Europol and the US DOJ reported on the successful operation to prevent major drug trafficking on the darknet.

In August, analysts at The Block found that after Bitcoin the most popular cryptocurrencies are Monero (XMR) and Litecoin (LTC).

In one of the latest reports, Chainalysis identified Eastern Europe as a leader in darknet market activity.

What is the darknet? What is Tor?

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