The landscape of cryptocurrency-related crime is undergoing a significant shift, with criminals moving away from Bitcoin as their primary choice for money laundering. Instead, stablecoins are emerging as a popular alternative due to their accessibility and ease of use.
Tara Annison, the former head of technical crypto advisory at Elliptic, shed light on the evolving nature of crime in Web3 during a presentation at EthCC in Paris.
The Shift Towards Stablecoins and Silver Lining for Law Enforcement
With the maturity of the industry, Bitcoin is no longer the cryptocurrency of choice for illicit activities and money laundering. Criminals are now turning their attention to dollar-denominated assets, such as USD Coin (USDC). This is because they offer seamless accessibility and can be laundered through decentralized exchanges (DEXs).
These assets become prime targets for criminals due to their deep liquidity and substantial trading volumes, making them concerning for law enforcement.
Annison pointed out a potential silver lining from a law enforcement perspective. Centralized issuers like Circle can freeze specific USDC tokens before criminals can convert them into fiat through DEXs or centralized exchanges. This action has resulted in an increased number of accounts with USDC and Tether (USDT) being boycotted. Also, effectively freezing the funds that criminals can no longer access.
Ponzi and Pyramid Schemes Continue to Loom
While criminals shift towards more sophisticated methods of laundering funds, Ponzi and pyramid schemes continue to be prevalent in the sector. Annison highlighted that unsuspecting victims have lost a staggering $7.8 billion to these types of scams.
Criminals are employing chain swapping and asset swapping, which amount to about $4.1 billion in illicit funds, as they attempt to obfuscate their activities and evade blockchain analytics firms.
Impact of the Bear Market
The ongoing bear market has brought about a decline in scams within the sector, with a 46% decrease compared to previous years. The lower cryptocurrency prices and reduced hype have made the sector less attractive to cybercriminals, resulting in a decrease in the number of scams. However, it’s essential to remain vigilant during future bear markets, as the threat of illicit activities persists.
Annison also shed light on the increasing use of cryptocurrencies to evade sanctions and finance terrorist activities. Assets like TRON TRX and Tether have become popular choices for these illicit purposes, warranting enhanced scrutiny and security measures.
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