Privacy Coins

• Privacy coins (e.g., Monero, Zcash) incorporate stealth addresses, ring signatures, or zero-knowledge proofs, which mask transactions on-chain.
• Criminals exploit mixers that support these coins, compounding the anonymity provided by both the coin’s built-in privacy features and the mixer’s pooling of deposits, thereby making forensic tracing significantly more difficult.

• Decentralized mixers can enhance the anonymity of privacy coins by pooling multiple sources of funds, including swapped or bridged privacy coins, making it nearly impossible to trace specific inputs.
• The absence of centralized control or compliance checks in these mixers amplifies the privacy-centric features of these coins, frustrating efforts to identify originating wallets or ultimate beneficiaries.

• Criminals use cross-chain bridges to convert assets from public blockchains into privacy coins (or vice versa), capitalizing on privacy features such as ring signatures or stealth addresses.
• The bridging process severs the visible chain of custody, stacking privacy-enhancing tools to further complicate transaction history reconstruction.
• When privacy coins are introduced or exited through bridging, investigators lose critical links in following the money due to anonymized addresses and obscured transaction metadata.

• By pairing privacy coins (e.g., Monero, Zcash) with onion routing, criminals shield both transactional data and network details.
• Multiple encryption layers at the network and coin protocol level impede investigators seeking to correlate addresses with real-world entities.

• Criminals enhance anonymity by combining VPN services with privacy-focused cryptocurrencies, such as those using stealth addresses or ring signatures.
• The VPN conceals the IP addresses involved, complicating efforts to connect on-chain privacy mechanisms to specific users or locations. This increased secrecy hinders investigators' attempts to link deposits, transfers, and withdrawals to the true origin of funds.

• Proxies enhance the inherent anonymity of privacy coins by concealing IP addresses behind rotating endpoints.
• Investigators find it challenging to link network origin data with on-chain anonymity features, significantly hindering their ability to identify the ultimate beneficial owner.

• By combining privacy-enhanced cryptocurrencies with the anonymity of public hotspots, criminals achieve layered obfuscation of both on-chain and network-level identifiers.
• Transactions originating from shared IP addresses offer little to no visibility into genuine user identities, complicating attribution for AML investigators.

• By routing transaction broadcasts through multiple VPN servers, criminals prevent investigators from linking IP-based transaction data to real-world identities.
• Multi-hop VPN usage compounds the inherent anonymity features of privacy coins (e.g., ring signatures, stealth addresses), further obscuring the origins and beneficiaries of illicit fund flows.

• Onion over VPN adds an additional layer of anonymity on top of privacy coins’ built-in obfuscation features, such as stealth addresses and ring signatures. Investigators must overcome not only blockchain-level privacy but also multiple network encryption layers.
• This multi-tier approach significantly hinders any attempt to match transaction flows or wallet addresses with real-world identities, further reducing the traceability of illicit proceeds.

Automated peel-chains in assets such as Monero or Zcash add a cryptographic fog layer, making each scripted hop practically untraceable beyond the entry/exit points.

• Instant exchange services offering privacy-focused cryptocurrencies (e.g., Monero, Zcash) enable criminals to conceal transaction details.
• Rapid swaps into and out of privacy coins further mask the flow of funds, as ring signatures or stealth addresses shield transaction origins.
• Converting back to other assets after obfuscation breaks traditional investigative methods reliant on transparent ledgers.

• Self-hosted wallet software tailored for privacy coins (e.g., Monero, Zcash) integrates anonymity features such as stealth addresses or ring signatures directly, impeding investigators from tracing transaction flows.
• By moving funds into a privacy coin wallet they control, criminals sever key links to the original source of illicit proceeds, frustrating standard blockchain surveillance.
• In many cases, they also combine CoinJoin or similar mixing protocols within non-custodial wallets, further increasing anonymity and complicating AML/CFT compliance efforts.

• Criminals use privacy-oriented cryptocurrencies (e.g., Monero, Zcash) within these advanced wallets to capitalize on stealth addresses, ring signatures, or zero-knowledge proofs. Such features inherently conceal transaction details.
• By holding, layering, or exchanging these privacy coins in a wallet designed to obscure flows, criminals mask the origins and ownership of illicit proceeds, hindering regulatory insight and law enforcement investigations.

• Some extortion rings specify privacy-centric cryptocurrencies (e.g., Monero, Zcash) to conceal forced payments.
• Built-in anonymity features—such as stealth addresses and ring signatures—obfuscate transaction details, making the flow of coerced money difficult to track.
• Criminals can then convert these anonymized funds into other digital assets or fiat, masking the extortion origin.

• Criminals convert funds from public cryptocurrencies into privacy-centric coins (e.g., Monero) that obscure sender and receiver details.
• Techniques such as ring signatures or stealth addresses hinder investigators from tracing the illicit proceeds back to the ransomware source.

• Criminals involved in forced prostitution or child exploitation use privacy-centric cryptocurrencies (e.g., Monero) to enhance anonymity.
• Built-in mechanisms like ring signatures or stealth addresses obfuscate transaction details, making it difficult for authorities to trace the flow of illicit funds.
• This heightened secrecy aligns with the technique’s emphasis on anonymized payment channels.

• Some criminals specifically leverage privacy-focused cryptocurrencies to conceal the origin of their child exploitation proceeds.
• Obfuscating features like stealth addresses or ring signatures thwart traditional blockchain analytics and reduce transparency around transaction participants.

• Layering is enhanced by privacy features (e.g., ring signatures, stealth addresses) that obscure both senders and recipients.
• Illicit funds can be moved from a public chain into privacy coins, then transitioned back to other assets or platforms, making the original source nearly impossible to trace.
• Criminals execute multiple quick hops in and out of privacy-focused protocols to break transaction linkages, defeating conventional blockchain analytics.

• Darknet actors frequently prefer privacy-focused coins (e.g., Monero, Zcash) for their built-in anonymity features, such as ring signatures and stealth addresses.
• By converting from more traceable cryptocurrencies into privacy coins, criminals cloak the funds’ origins and destinations, thwarting conventional blockchain analytics.
• This added layer of obfuscation helps evade law enforcement and AML controls attempting to link transactions to real-world identities.

• Criminals exploit built-in anonymity features (e.g., ring signatures, stealth addresses) to hide the flow of illicit funds.
• They rapidly convert mainstream cryptocurrencies into privacy coins, obscuring transaction origins and beneficiaries.
• By cycling these coins through many short-interval transfers across wallets or exchanges, they break transactional links that investigators rely on for traceability.

• Criminals leverage built-in anonymity features like stealth addresses and ring signatures to conceal transaction origins and amounts.
• Combining privacy coin transfers with mixing protocols (e.g., CoinJoin) adds a layer of obfuscation, obscuring the wallet trail.
• This additional anonymity enhances the complexity of the layering process, making it significantly harder to link assets back to criminal activity.

• Enhanced privacy features such as ring signatures and stealth addresses obscure transaction details.
• Criminals leverage P2P trades of privacy coins to conceal beneficial ownership, bypassing formal identity checks.
• Converting illicit funds into privacy coins on decentralized forums further anonymizes the trail before exchanging back to fiat or other assets.

• Privacy-centric cryptocurrencies (e.g., Monero, Zcash) incorporate features such as stealth addresses, ring signatures, or zero-knowledge proofs that obscure transaction details.
• Sanctioned parties exploit these anonymity features to conceal the flow of value from blacklisted addresses or jurisdictions, preventing detection by compliance tools.
• This heightened privacy thwarts standard blockchain analytics, allowing undisclosed funds to move into or out of sanctioned regions.

• Certain cryptocurrencies (e.g., Monero, Zcash) incorporate on-chain privacy features like stealth addresses or ring signatures.
• Drug traffickers exploit these features to hide the transaction sender, receiver, and amounts, severely undermining typical blockchain tracing methods.
• Once laundered through privacy coins, the illicit proceeds can be converted into more transparent cryptocurrencies or fiat, further distancing them from narcotics sales.

• Criminals use stealth addresses or ring signatures to obscure both sender and receiver details when purchasing precursor chemicals online, frequently on dark web marketplaces.
• After acquiring privacy coins with illicit proceeds, they quickly convert them back to fiat or other cryptocurrencies to pay foreign chemical brokers with minimal traceability.
• These built-in anonymity features subvert AML efforts, enabling repeated procurement of fentanyl precursors without clear transactional footprints.

Cryptojacking operations favor privacy coins such as Monero, which use features like stealth addresses and ring signatures to make mined funds practically untraceable. This enables criminals to safely aggregate and move cryptojacked proceeds without exposing the true source.