When you look at the data, cryptocurrency crime isn’t as widespread as you might think. In fact, the volume of cryptocurrency transactions in 2019 was relatively small. Then, in 2020, the percentage of criminal transactions dropped to 0.34 percent and 10 billion in 2020. This means that the narrative that cryptocurrency is used by organized crime has no real basis. Instead, the majority of cryptocurrency used for “illicit means” was in financial scams. While it’s still too early to tell which types of cryptocurrency criminals use, the data points to a much lower number of instances of cryptocurrency crimes.
One notable case involved a New Zealand man who was arrested for laundering over $2 million of cryptocurrencies by purchasing luxury vehicles. This case was brought to light after the US Department of Justice unsealed a superseding indictment. The criminals were able to launder money for drug traffickers through various means, including front companies, casinos, and cryptocurrency mixing services. One of the individuals even used cryptocurrency to bribe a US Department of State official.
There are two main types of crypto crime. The first category involves decentralized exchanges. Despite being decentralized, many of these exchanges do not collect KYC information on their users, allowing criminals to steal funds without the victim’s knowledge. This lack of transparency is a big risk. In addition to this, the fact that decentralized exchanges do not have the power to freeze funds on their sites makes them an easier target for criminals.
Despite the hype and the growing use of cryptocurrencies by criminals, their overall use is still very small. In fact, the amount of cryptocurrencies being misused for criminal activities is less than 1% of the total value. However, if one takes the number of transactions of illegal activities and the value of illicit crypto assets, the total volume is projected to reach $15.3 trillion in 2022. This means there is still a significant opportunity to combat cryptocurrency criminals.
The proposed crypto regulations are a direct application of the cash rules. Instead of curbing cryptocurrency crime, the new rules will drive criminals away from regulated exchanges and into unregistered P2P exchanges. As a result, cryptocurrency crime will be worse than it is right now. In the long run, they will become more lucrative than they already are. And that’s where these proposed regulations come in. So, if you want to protect the global economy, you must act now.
Another recent instance of cryptocurrency crime was the hacking of Argentina’s immigration department. The DNM (National Migration Agency) received a ransom note demanding a payment of $2 million to unlock the files. In an attempt to prove that the hack was legitimate, the ransom amount was increased to $4 million when the government refused to pay. This is one example of how cryptocurrency crimes have spread so rapidly. If you have any suspicions, it’s important to get the facts before you make a decision.
The fact is – every new technology will give rise to new types of crime. However, as cryptocurrency continues to grow, the public and private sectors must work together to ensure that users can safely conduct transactions and that criminals cannot misuse these new assets.