Crime in Web3 is shifting from Bitcoin (BTC) to stablecoins and Ponzi schemes are still rife, according to Elliptic’s former head of crypto consulting.
Tara Annison shared her latest insights into the dark world of cryptocurrency-related crime in her talk on the final day of EthCC Paris, discussing the various ways digital assets can facilitate crime or be used for money laundering.
The presentation draws on Web3 crime insights from Elliptic, Chainaanalysis, and TRM Labs, with Annison speaking as a former Elliptic employee who recently left the company.
Anison said bitcoin is no longer the cryptocurrency of choice for illicit activities or money laundering. As the cryptocurrency industry matures, the establishment of decentralized finance protocols, mixing services, and stablecoins offers criminals new avenues to explore.
Criminals have turned to dollar-denominated assets such as USD Coin (USDC) due to their ease of access and ability to launder money through decentralized exchanges (DEXs).
“Criminals use this as a target point. It is also very easy to launder money through DEX. There is a lot of liquidity and a lot of trading volume, so this is very worrying.”
Annison highlighted a potential silver lining from a law enforcement perspective, noting that centralized issuers like Circle could freeze specific USDC tokens before criminals “exit from assets” to fiat via a DEX or centralized exchange.
“What we’re seeing now is more and more USDC and USDT accounts being blacklisted, those funds are frozen and criminals can’t access them now.”
Ponzi and pyramid schemes remain a feature of the industry, with Anison noting that $7.8 billion was stolen from unwitting victims of such schemes.
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Criminals are finding more sophisticated ways to launder money. Chain swaps and asset swaps are common as criminals try to hide their illicit activities, Anison said.
“We’ve seen that figure be around $4.1 billion. So they’re using DEXs to make strides. They’re using coin exchange services, they’re using mixers, they’re using bridges, all basically trying to get blockchain analytics companies off course.”
Anison said the $1.2 billion stolen from DEXs ended up in centralized exchanges. The number of scams in the industry has dropped by 46% compared to previous years. Anison said the reason is the ongoing bear market, which has inevitably made the industry less attractive to cybercriminals.
“They’re less hyped and less expensive, so criminals can’t profit off of them. So at least the next time we’re in a bear market, remember, at least there will be fewer scams.”
Annison also spoke about the growing use of cryptocurrencies to evade sanctions and finance terrorism, highlighting that TRON (TRX) and Tether (USDT) are popular assets for illicit use.
The advent of virtual universe experiences has also attracted nefarious players. Various crimes continue to occur in the virtual world, including phishing attacks, non-fungible token theft, wallet contamination, and augmented reality hacking.
Annison’s presentation highlighted the realities of criminal activity in the industry, which will require heightened security measures to protect users and combat illegal activity.
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