Stablecoins Used in $649 Billion of Crime in 2024, but Legitimate Use Grows Faster

Criminals moved $649 billion in stablecoins to high-risk addresses last year, according to the 2024 Crypto Crime Report by Bitrace. This figure represents a significant increase from the previous year, highlighting the growing use of stablecoins in illicit activities. However, it is important to note that while the total use of stablecoins in fraud and money laundering grew, the legitimate sector grew even faster. This indicates that the stablecoin sector is expanding at a pace that outstrips its criminal usage.

The report also shed light on other components of crypto crime, such as gambling and darknet markets. It highlighted the growing enforcement actions against stablecoin money laundering, with Tether and Circle freezing over $1 billion in assets last year. This action underscores the increasing efforts by stablecoin issuers to combat illicit activities within their ecosystems.

Stablecoins play a crucial role in the international crypto ecosystem, but they also fulfill a similar role in criminal activities. For instance, crypto sleuth ZachXBT alleged last month that North Korean hackers have significant participation in this space. The 2024 Crime Report by Bitrace details illicit activities across the industry, with a specific focus on stablecoins. The data claimed that $649 billion in stablecoins went to high-risk addresses last year, a definite increase from 2023. However, these transactions only amounted to 5.14% of global stablecoin volume, a decrease from 5.94% the previous year. This suggests that while the absolute amount of stablecoins used in crime is increasing, the proportion of stablecoin transactions involved in criminal activities is decreasing.

Tether makes up the overwhelming majority of these transactions since it is the most popular stablecoin. Tron and Ethereum were the most popular blockchains for USDT stablecoins, making up around 90% of the crime-related volume. Ethereum’s presence grew relative to Tron, but the latter blockchain still represents more than 75% of transactions. This indicates that while Ethereum is gaining traction in the criminal underworld, Tron remains the dominant blockchain for illicit stablecoin transactions.

The report also covered several other sectors, including illicit trade on the darknet, which grew by more than $30 billion as vendors switched to DeFi to avoid law enforcement. Crypto gambling is also on the rise, increasing 17.5% to $217.84 billion. However, the industry is also taking several initiatives of its own. Scams and frauds have ballooned last year, jumping from $12 billion in 2023 to $52 billion in 2024. Escrow services play a vital intermediary role, and Tether has been working to freeze its wallets. They’ve only neutralized a tiny fraction of the trade, but it’s a good start. Tether and Circle have been active in freezing crypto wallets used by criminals since stablecoins are a lynchpin of this ecosystem. The quantity of total frozen assets grew by nearly $1 billion in 2024, double the amount of the past three years combined. This is far below the necessary amount, but hopefully these operations can scale up.

In summary, stablecoins are a thriving component of crypto’s criminal underworld, but enforcement is becoming more determined and sophisticated. If the industry continues to focus on fighting fraud and money laundering, it could make a real difference. Stablecoin’s legitimate uses dwarf this sector, and criminals’ total market share is decreasing. This suggests that while stablecoins are being used for illicit activities, the legitimate use of stablecoins is growing at a faster pace, and enforcement efforts are having a positive impact on reducing criminal activity in the stablecoin ecosystem.