Is crypto the currency of criminals?

Girikrishna GP
Jan 2
3 min read

Whenever a big scam, ransomware attack, or dark-web bust is being reported about, the same word keeps recurring next to it: crypto. Politicians warn about it. Regulators scrutinise it. Opponents argue that it is the economic support of the criminals around the globe.

However, is cryptocurrency the currency of criminals, or does it have a more simplistic narrative, which fails to consider real-life uses of the technology?

We should divide perception and reality.

Why is crypto associated with crime?

A businessman in a suit with his hands in handcuffs holding a Bitcoin symbol, representing cryptocurrency linked to crime or legal consequences via The Fintech times

The problem of reputation with crypto did not occur out of the blue. During its infancy, Bitcoin gained popularity in dark-web marketplaces such as Silk Road, where it was being used to conduct illegal drug deals. This association remained early.

Crypto also has characteristics that may attract criminals:

Pseudonymous transactions
Borderless transfers
No jurisdiction to hinder payments.

Such characteristics were appealing to crypto ransomware activities, Internet fraudsters, and illicit marketplaces, particularly prior to the police understanding how blockchain monitoring functioned.

What the data actually shows

Although the headlines indicate otherwise, several blockchain analytics companies have continuously demonstrated that a very small percentage of crypto usage is criminal activity

Reports on the blockchain analysis typically report that illicit transactions comprise less than 1 percent of total crypto activity during most years. An enormous percentage of the crypto transactions are linked to:

Trading and investing
Remittances
Payments
DeFi and NFTs
Long-term holding

Conversely, cash is still much more popular in crime, and this fact will always be so due to the lack of any digital evidence.

Cryptocurrency is, in fact, a little easier to follow than cash.

This is the con, according to the irony: crypto can be a technology that is worse for criminals than money.

The majority of blockchains are open registers. All purchases are documented permanently. As soon as a wallet is associated with a real-life identity due to an exchange, KYC procedure, or a failure of the working process, the whole history of the transactions can be traced.

This has assisted in enforcing the law:

Recover stolen funds
Track ransomware payments
Destroy dark-web markets.
Prosecute financial crimes of high magnitude.

Some of the high-profile arrests and seizures occurred due to the fact that criminals underestimated the level of transparency of blockchains.

The reason why criminals continue to use crypto is still a mystery.

In case crypto can be tracked, how come criminals continue to use it?

Mainly because:

It is quicker than conventional banking.
It works across borders
Part of Some users are misinformed that it is anonymous.
Enforcement is not homogeneous across the world.

However, with time, even criminals are shifting to Bitcoin and more discreet channels - such as cash, shell companies, or even the traditional financial loopholes.

The bigger picture: Crypto as a Swiss cheese.

Cryptocurrency is not criminal, but a neutral infrastructure. It can be utilized positively as well as negatively, like the internet, email, or smartphones.

The technology that facilitates scams also facilitates:

Lower cross-border payments.
Access to finance by the unbanked.
Censorship-resistant donations
Open financial systems.

The term crypto as the currency of criminals fails to acknowledge the right and booming applications.

Then, Is Crypto the currency of criminals?

The truthful reply: No, but criminals do not use it any more than they use cash and banks, and the internet.

Crypto is not a criminal uniqueness. Indeed, it is not an easy choice when a serious crime is concerned due to its transparency. The story continues owing to: