According to a recent report by TRM Labs, Bitcoin’s popularity among cybercriminals has diminished significantly in recent years. The study reveals that criminals are now turning back to traditional fiat channels or exploring alternative cryptocurrencies for their illicit activities.
TRM Labs, a digital asset compliance and risk management firm, highlighted a notable decline in the volume of illicit finance involving Bitcoin over the past seven years. The report establishes that Bitcoin’s share in criminal transactions has plummeted from 97% in 2016 to a mere 19% in 2022, indicating a significant shift away from the cryptocurrency.
While illicit activity involving cryptocurrencies has witnessed an increase, TRM Labs emphasizes that these criminal practices were not originated by crypto itself. Cash and other forms of fiat-related finance continue to be the default means for financing illicit activities and money laundering.
The rise of the multichain era
The rise of the multichain era has played a pivotal role in reshaping the distribution of illicit crypto volume. Ethereum has taken the lead with a 68% share, followed by BNB Smart Chain at 19%. The report further highlights Tron as the predominant currency for terrorist financing, accounting for 92% of such activities, surpassing Bitcoin’s former exclusive status.
In terms of specific examples, TRM Labs disclosed that approximately $2 billion in crypto assets were stolen through attacks on cross-chain bridges in 2022, but very little of it involved Bitcoin. Moreover, the report mentions a 240% increase in the use of Tether (USDT) among tracked terror financing entities in 2022.
While this shift away from Bitcoin may be viewed positively for its institutional adoption prospects, it is crucial to acknowledge the significant involvement of Bitcoin in various illicit activities. Ponzi and pyramid schemes received around $7.8 billion in Bitcoin, darknet markets specializing in narcotics amounted to $1.5 billion, and DeFi hacks and exploits resulted in a theft of $3.7 billion, all taking place in 2022.
TRM Labs’ findings contribute to the broader understanding of the evolving landscape of crypto-related illicit activities. Despite Bitcoin’s waning popularity among cybercriminals, the research underscores the need for enhanced security measures, education, and regulatory frameworks to mitigate rising crypto scams and money laundering risks.