Since cryptocurrency is still so new, we are often asked about the biggest myths and misunderstandings about it. It’s not unusual for a new market or product to confuse people when it first arrives on the scene, until a critical mass of people get familiar with it. Think about Airbnb, for example: the idea of travel that included staying in a stranger’s home seemed crazy until it took off.
According to by numerous blockchain analytics companies, illicit activity accounts for less than 1 percent of cryptocurrency transactions. And of that small portion, scams — not money laundering, terrorism, financing, sanctions, or other illegal activities — make up the of crypto-currency related crime. from industry group (CCI) found that from 2017 to 2020 illicit economic activity overall was overwhelmingly conducted through traditional financial intermediaries.
Indeed, fiat currency (good old-fashioned cash) continues to be the funding of choice for criminals. that ~$1.6 trillion is laundered each year, or 2.7% of global GDP. In contrast, in cryptocurrency actually fell quite dramatically — from 2.1% or $20 billion in transaction volume in 2019 to less than half a percent (0.34%, or $10 billion) in 2020. Even traditional payment networks, like SWIFT (Society for Worldwide Interbank Financial Telecommunication), that “cases of laundering through cryptocurrencies remain relatively small compared to the volumes of cash laundered through traditional methods.”
According to a , “Despite the perceived attractiveness of cryptocurrencies for money laundering purposes, it is also worth noting that an estimated 99 percent of cryptocurrency transactions are performed through centralised exchanges, which can be subject to AML/CFT regulation similar to traditional banks or exchanges.”
Crypto — unlike cash — is more easily tracked because public searchable databases (blockchains) already exist for the majority of these transactions. This provides law enforcement with access to substantially more information about a crypto transaction than one involving cash, including the date and time of each transaction, the type of crypto transacted, the amount transacted, the wallet address involved, and the unique transaction identifier (hash value). This is a goldmine of immediately accessible information that can sometimes take law enforcement months or even years to obtain with cash transactions.
“The adoption of blockchain helps track the use of the cryptocurrency. The blockchain is a continuously growing list of transactions (blocks) made using cryptocurrency that are recorded chronologically. The blockchain is managed by a peer-to-peer network (miners) collectively adhering to a protocol for validating new blocks. Once the transaction data in a block is recorded, it cannot be altered retroactively as it would require altering all the subsequent blocks. As the data is stored in many computers, there is little risk of data loss, and since it is encrypted, the confidentiality of data is maintained. Because the blockchain is a public ledger of all cryptocurrency transactions, it is searchable and can be used to track all transactions.”
The Department of Justice that “cryptocurrency, despite the purported anonymity it grants criminals, provides law enforcement with an exceptional tracing tool: the blockchain.” Using the data provided by blockchains, law enforcement has teamed up with private analytics firms to analyze blockchain transactions involved in illicit finance. This has been seen in many real world investigations ranging from , , and even . In those cases, law enforcement traced the crypto of dangerous criminals who were ultimately brought to justice or had their assets seized.
These examples illustrate the fallacy of thinking that crypto is merely a “haven” for criminal activity or illicit financial dealings. Instead, digital currency secured by cryptography — cryptocurrency — offers many breakthroughs in investigative techniques.
Sep 22, 2023,
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Sep 22, 2023,
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Sep 19, 2023
Today we’re launching an effort to mobilize 52 million crypto owners – younger and more diverse than the US population as a whole – into a powerful force heading into the 2024 elections with an intense focus on nine key states.