In recent years, the association of crypto-assets with fraud, terrorism financing, and money laundering has been a prevailing concern. However, recent findings challenge these perceptions. According to a report by Chainalysis, crypto-related criminal activities are on the decline, with illegal transactions accounting for only 0.34% of the total transaction volume in 2023, down from 0.42% the previous year. This indicates a positive trend as the crypto industry continues to mature and establish itself as a legitimate financial ecosystem.
Decrease in Illegal Transactions:
The Chainalysis report highlights a noteworthy reduction in illegal transactions involving cryptocurrencies. In 2023, a total of $24.2 billion was sent to illegal cryptocurrency addresses, marking a significant decrease from the all-time high of $39.6 billion in 2022. Notably, 61.5% of this illegal transaction volume, totaling $14.9 billion, was associated with sanctioned entities, indicating a shift in the nature of crypto-related illicit activities.
Bitcoin’s Changing Landscape:
One of the most intriguing revelations is the diminishing attractiveness of Bitcoin for criminal activities. The report emphasizes a continuous decline in Bitcoin’s status as the preferred cryptocurrency among cybercriminals. While certain illicit activities such as darknet market sales and ransomware payments still predominantly occur in Bitcoin, other activities, including fraud and transactions involving sanctioned entities and jurisdictions, have shifted towards stablecoins.
Stablecoins Emerging as Preferred Vehicles:
The report indicates that only around 25% of all illegal transactions are now conducted using Bitcoin, whereas the majority of illegal activities are facilitated through stablecoins. Stablecoins, with their pegged value to traditional currencies, provide a more stable environment for transactions, reducing the volatility associated with other cryptocurrencies.
Identifying the Popular Stablecoin:
While the Chainalysis report does not specify which stablecoin is favored by cybercriminals, a United Nations (UN) report sheds light on the matter. The controversial stablecoin Tether (USDT) emerges as the preferred vehicle for cybercriminals. Tether, currently circulating approximately $95 billion worldwide and tied to the US dollar, stands out despite challenges faced by other stablecoins like TerraUSD and BinanceUSD.
UN’s Insight on Tether:
According to the UN report, Tether, when transmitted through the TRON blockchain-based payment network, is the “preferred choice for regional cyber fraud operations and money launderers alike due to its stability and the ease, anonymity, and low fees associated with its transactions.” This sheds light on why Tether continues to thrive while other stablecoins face difficulties or regulatory scrutiny.
The evolving landscape of crypto-related criminal activities paints a positive picture for the industry as a whole. The decline in overall illegal transactions and the diminishing appeal of Bitcoin for illicit activities demonstrate the maturation and increased scrutiny of the crypto space. As stablecoins, particularly Tether, gain prominence in facilitating illicit transactions, regulatory efforts and industry stakeholders must work together to ensure the continued integrity and security of the cryptocurrency ecosystem.
