December 11, 2023

A cryptocurrency expert recently speculated that criminals are ditching bitcoin in favor of stablecoins, which are considered an easier option for illicit financial activity.

From Bitcoin to Stablecoins

It is often believed, especially in the mainstream media, that Bitcoin is one of the main currencies for illegal activities. However, recent insights suggest that this trend has turned. Tara Annison, former head of crypto consulting at Elliptic, first reported by CoinTelegraph, stated that criminals in the crypto world are now preferring stablecoins, specifically USD Coin (USDC), over Bitcoin.

Annison delves into the changing dynamics of cryptocurrency-related crime in her talk at EthCC Paris. She noted that Bitcoin’s decline in popularity among criminals can be attributed to the rise of decentralized finance protocols, mixing services and, most notably, stablecoins. These digital assets, especially those pegged to the U.S. dollar, offer new and more discreet avenues for illicit transactions.

Why switch to stablecoins?

Annison explained that assets like USDC can be easily accessed and easily laundered through decentralized exchanges (DEXs). She said that, in her view, the deep liquidity and high trading volumes of these platforms make them ideal for this type of activity.

However, the picture is not all doom and gloom. Annison highlighted the potential advantages for law enforcement agencies. Centralized issuers such as Circle have the ability to freeze specific USDC tokens. This means that until these criminals convert their assets into fiat currency through a DEX or centralized platform, their funds may be frozen. Annison commented that, in her view, we are witnessing an increase in blacklisted USDC and USDT accounts, effectively freezing assets that criminals cannot access.

The amount of fraud is as high as 7.8 billion US dollars

Anison went on to say that stablecoins are not the only concern. Ponzi schemes and pyramid schemes continue to plague the crypto industry. Unsuspecting victims were defrauded of a staggering $7.8 billion through these scams. Additionally, criminals are constantly innovating, employing techniques like chain swaps and asset swaps to cover their tracks, using a myriad of tools from decentralized exchanges to mixers in order to confuse blockchain analysis companies in their tracks.

Given that cryptocurrency scams are down 46 percent compared to previous years, Annison sees the current bear market in cryptocurrencies as an important factor, suggesting the industry has become less lucrative for criminals as hype dwindles and prices drop.

Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.