Darknet Vendors Turn to DeFi and Monero to Evade Crackdowns

Darknet market vendors are changing their tactics as law enforcement tightens restrictions on centralized exchanges. According to the latest crypto crime report, these illicit actors are increasingly turning to decentralized finance (DeFi) platforms to move and obscure funds. While traditional exchanges remain the main route for cashing out, a clear shift toward decentralized protocols has emerged as authorities strengthen their monitoring of digital transactions.

The push toward DeFi comes in response to tougher Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations on centralized platforms. With authorities worldwide cracking down on illicit financial activities, darknet vendors are seeking alternative ways to store and transfer funds. Law enforcement agencies have also intensified their efforts, seizing digital assets and shutting down major laundering networks. As a result, vendors have begun moving a greater share of their proceeds into decentralized ecosystems, making it harder for authorities to track transactions.

This transition is most visible among wholesale vendors, who operate at larger scales and need efficient ways to process significant amounts of digital currency. Smaller-scale retail vendors, on the other hand, are choosing to hold onto their earnings in private wallets for longer periods, delaying conversions to fiat to avoid detection. Beyond darknet operations, fraudulent schemes across multiple blockchains are also leveraging DeFi platforms to handle illicit funds.

Despite this trend, centralized exchanges still dominate as the main method for laundering digital assets. However, the growing reliance on DeFi means that law enforcement agencies will need to evolve their tracking strategies. The increased use of decentralized platforms presents a challenge for regulators, who are now working to adapt their investigative techniques.

Another significant shift in darknet market behavior is the change in preferred digital currencies for transactions. As authorities become more effective in tracing Bitcoin movements, vendors are increasingly adopting Monero (XMR), a privacy-focused cryptocurrency. Unlike Bitcoin, which operates on a transparent public ledger, Monero offers advanced privacy features such as ring signatures, stealth addresses, and confidential transactions, making it extremely difficult to trace senders and recipients.

Authorities have dismantled several darknet markets in recent years, exposing the risks of using Bitcoin in illicit transactions. This has driven many darknet operators and cybercriminals to favor Monero as their primary payment method. The ability to obscure transaction details gives Monero an edge over Bitcoin, leading to its growing popularity among those seeking greater anonymity.

Even with the rise in crypto-related crimes, darknet market revenues have declined compared to previous years. This drop reflects the growing pressure from law enforcement and regulatory bodies, which have made it harder for these platforms to operate as freely as before. While illicit actors continue to adapt, the overall trend suggests that efforts to disrupt illegal financial activities are having an impact.

As authorities refine their enforcement strategies, the battle between law enforcement and digital financial crime continues. The increased use of DeFi and privacy coins signals an ongoing evolution in laundering tactics, forcing regulators to keep pace with the rapidly shifting landscape of digital finance.