Bitcoin is no longer an asset of choice for criminals

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Web3 crime is shifting from bitcoin (BTC) to stablecoins, while ponzi schemes remain prevalent, says former crypto technical advisory manager Elliptics.

Tara Annison shared the latest insights into the murky world of cryptocurrency crime during a presentation on the last day of EthCC in Paris, addressing a wide variety of ways digital assets facilitate crime or are used to launder funds.

According to Annison, Bitcoin is no longer the cryptocurrency of choice for conducting illicit activities or laundering money. As the cryptocurrency industry has matured, the establishment of decentralized finance (DeFi) protocols, mixing services and stablecoins, presents new avenues for criminals to explore.

Source: Tara Annison.

Criminals have turned to using dollar-denominated assets, like USD Coin (USDC), due to their easy accessibility and ability to be laundered via decentralized exchanges (DEX).

Criminals use it as a target. It is also very easy to wash them via Dex. There is deep liquidity, very good volume, so it is quite worrying.

Annison pointed to a potential silver lining from a law enforcement perspective, noting that centralized issuers like Circle could freeze specific USDC tokens before criminals can exit the asset in fiat through DEXs or centralized exchanges.

What we are seeing now is an increased number of accounts with USDC and USDC being blacklisted, and these are frozen funds that criminals can no longer access.

Ponzi and pyramid schemes remain a feature of the industry, Annison noting that $7.8 billion has been stolen from unwitting victims of these types of scams.

Related:How the IRS Seized $10 Billion in Crypto Using Blockchain Analysis

Criminals are finding more sophisticated ways to launder funds. Annison said chain swapping and asset swapping are prevalent as criminals try to cover up illicit activity.

We’ve seen that to the tune of about $4.1 billion. So they jump through using a dex. They use a coin exchange service, they use a mixer, they use a bridge, all basically to try and throw blockchain analytics companies off the trail.

Annison said $1.2 billion stolen from DEXs eventually ends up on centralized exchanges. Compared to previous years, scams in the sector have decreased by 46%. The reason, according to Annison, is the ongoing bear market which has inevitably made the sector less attractive to cybercriminals.

They’re less fashionable, the prices are lower, so it’s not as profitable for criminals. So at least the next time we’re in a bear market. Keep in mind that scams are at least on the decline.

Annison also touched on the growing use of cryptocurrencies to evade sanctions and finance terrorist activities, pointing out that TRON and USDT are popular assets for illicit use.

The advent of metaverse experiences has also seen the space attract nefarious actors. Various crimes are also emerging in virtual worlds, including phishing attacks, NFT theft, wallet contamination, and augmented reality hacks.

Annisons’ presentation highlighted the reality of criminal activity in the sector, which will require increased vigilance and security measures to protect users and combat illicit activity.

Magazine:U.S. Law Enforcement Agencies Ramp Up the Pressure on Crypto-Related Crime

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