Cryptocurrency crash triggers crisis for dark web exchanges

15Jul2022 OODA Analyst

The decline in the value of cryptocurrencies has created a cash rush that is pushing many underground exchanges to their breaking point. According to research from security company Cybersixgill, cybercriminals are looking to protect their pilfered funds by moving them from cryptocurrencies to fiat currencies, forcing some prominent underground exchanges toward bankruptcy. Operating on the dark web away from the prying eyes of law enforcement, the exchanges allow criminals to make transactions and potentially launder their ill-gotten gains by shifting the stolen funds from fiat cash to various cryptocurrencies — while paying the exchanges steep transaction fees for their discretion. Ideally, the exchanges retain a healthy mixture of cryptocurrency and fiat money, without either being too heavily in demand. That, however, has changed amid the larger crash in cryptocurrency prices. “As crypto prices fell, actors turned to these exchanges to dump it for fiat,” explained Dov Lerner, security research lead at Cybersixgill, in a blog post Thursday. “They quickly ran out of their dollar reserves (or their operators also feared losses from buying more crypto), and they ended operations.”