Criminals moved $649 billion in stablecoins to high-risk addresses last year, though this represents a smaller percentage of total volume than in previous years, according to a new industry report released Tuesday.
What to Know:
- Stablecoin use in illicit activities increased in absolute terms but decreased as a percentage of total market volume
- Tether remains the most popular stablecoin for criminal transactions, with Tron and Ethereum blockchains facilitating most illicit transfers
- Law enforcement and stablecoin issuers have stepped up enforcement, freezing nearly $1 billion in assets
Criminal Stablecoin Activity Grows While Losing Market Share
Cryptocurrency tracing firm Bitrace's 2024 Crypto Crime Report revealed that while illicit stablecoin transactions reached unprecedented levels, legitimate usage grew even faster. The $649 billion in stablecoins flowing to addresses classified as high-risk represented 5.14% of global stablecoin volume, a notable decrease from 5.94% in 2023.
"Since 2022, stablecoins replaced Bitcoin as the preferred currency for illicit transactions," the Onchain Foundation noted in a related analysis published on social media platform X.
Tether (USDT), the market's dominant stablecoin, accounted for the vast majority of transactions flagged as suspicious. Most of these transactions occurred on two blockchain networks: Tron and Ethereum. While Ethereum's share of illicit stablecoin activity increased over the past year, Tron still facilitates more than three-quarters of all suspicious transfers.
The report comes amid growing concerns from law enforcement agencies worldwide about cryptocurrency's role in facilitating financial crimes. Crypto security researcher ZachXBT alleged last month that North Korean hackers have what he described as "epidemic" participation in the stablecoin ecosystem.
Darknet Markets and Enforcement Efforts Intensify
Bitrace's report identified several other concerning trends beyond stablecoin misuse. Illicit trade on darknet marketplaces grew by more than $30 billion as vendors increasingly turned to decentralized finance platforms to evade detection by authorities.
Cryptocurrency gambling, another high-risk sector, also saw significant growth of 17.5%, reaching $217.84 billion in transaction volume last year.
Financial fraud showed the most dramatic increase, with cryptocurrency scams ballooning from $12 billion in 2023 to $52 billion in 2024. Fraudulent escrow services like Huione have emerged as key intermediaries in these schemes, though stablecoin issuers have begun targeting these operations.
Enforcement efforts have accelerated in response to these trends. Tether and Circle, two major stablecoin issuers, have become increasingly active in freezing wallets linked to criminal activity. The total value of frozen assets grew by nearly $1 billion in 2024 alone—double the amount frozen in the previous three years combined.
Industry observers note these enforcement actions, while still capturing only a fraction of illicit activity, represent a significant escalation in the fight against cryptocurrency crime.
Closing Thoughts
While stablecoins remain a crucial tool for criminals operating in the cryptocurrency space, their legitimate uses continue to expand more rapidly than illicit applications. As enforcement mechanisms become more sophisticated and widespread, the cryptocurrency industry appears to be making progress in addressing its longstanding association with financial crime.