BharatNotes What is Dark Web and Cryptocurrency Crime?
The dark web is the layer of the internet reachable only through anonymising networks — most commonly Tor (The Onion Router), whose ".onion" sites encrypt traffic in layers and bounce it through multiple volunteer relays to conceal identity and location. Cryptocurrency crime is the use of pseudonymous digital assets to fund, conceal or launder the proceeds of such activity. Together they create an ecosystem of "darknet markets" (DNMs) trading drugs, stolen data, weapons and cyber-attack tools, with payments settled in bitcoin, the privacy coin Monero, and increasingly stablecoins.
Key features
- Anonymity stack — Tor hides the user; cryptocurrency hides the money. Privacy coins (Monero) and mixers/tumblers further break the audit trail.
- Pseudonymity, not invisibility — bitcoin's public ledger lets investigators use blockchain forensics; this drove the shift towards privacy coins and stablecoins.
- Crime-as-a-service — ransomware kits, stolen credentials and fraud tools are sold on subscription.
Global status (latest data)
Per Chainalysis, illicit cryptocurrency addresses received at least US$154 billion in 2025 (a 162% year-on-year rise, largely from sanctioned entities), while darknet-market flows reached nearly US$2.6 billion in 2025. Stablecoins now account for about 84% of illicit transaction volume (Chainalysis 2026 Crypto Crime Report). The landmark enforcement case remains Silk Road, shut by the FBI in October 2013, when roughly 144,000 bitcoins were seized.
India: legal and institutional response
India has not banned crypto but has built a tax-and-trace regime.
| Instrument | Provision | Date / status |
|---|---|---|
| Finance Act, 2022 (S.115BBH) | Flat 30% tax on Virtual Digital Asset (VDA) gains; no loss set-off | Effective FY 2022-23 |
| Finance Act, 2022 (S.194S) | 1% TDS on VDA transfers above the threshold | Effective 1 Jul 2022 |
| PMLA notification | VDA service providers made "reporting entities" under PMLA, 2002 | 7 Mar 2023 |
| FIU-IND | Mandatory registration; show-cause notices to 9 offshore exchanges | Dec 2023 |
| I4C (MHA) | Indian Cyber Crime Coordination Centre; runs portal cybercrime.gov.in & helpline 1930 | Established 10 Jan 2020 |
Enforcement has sharpened: the Enforcement Directorate seized crypto worth ₹1,646 crore in the BitConnect Ponzi case (February 2025), and I4C was brought under PMLA in April 2025 to fuse cyber-crime and money-laundering efforts. MHA data (February 2026) record 28.15 lakh cyber-crime complaints in 2025 with losses of ₹22,495 crore.
UPSC angle
Frame answers around the triple challenge — anonymity (Tor), untraceable value transfer (privacy coins/stablecoins), and jurisdiction (offshore servers). Link to internal-security threats: narco-trafficking, terror financing, and ransomware against critical infrastructure. On the policy side, weigh India's calibrated approach — heavy taxation plus PMLA reporting rather than an outright ban — against the need for international cooperation (Interpol, FATF standards) and stronger blockchain-forensics capacity.
