Fewer cybercriminals are turning to Bitcoin as their primary method of transferring illicit funds, with bad actors opting to return to fiat channels or opt for other cryptocurrencies, according to new research.
The Illicit Crypto Ecosystem Report released June 28 by digital asset compliance and risk management firm TRM Labs shows that the volume of illicit financing involving Bitcoin (BTC) has dropped significantly over the past seven years.
TRM Labs says the new multi-chain era has led to a “qualitative leap forward” in Bitcoin’s role as the primary means of transferring criminal proceeds. The firm also emphasized that cash and other forms of fiat-related finance remain the “default” means of criminal money movement.
“In fact, cash and even older forms of finance such as hawala (moving money without actually moving it) remain the default means of financing illicit activities and money laundering.”
TRM Labs also noted that while illicit activity involving cryptocurrencies has increased, “cryptocurrencies did not invent these forms of crime.”
The firm reports that in 2022, roughly $2 billion in cryptocurrencies will be stolen through cross-chain bridge attacks, but very little of that will be bitcoin.
“The multi-chain era has broad implications for the distribution of overall illicit crypto transaction volume,” the report noted, adding that Bitcoin’s share of illicit transactions plummeted from 97 percent in 2016 to 19 percent in 2022.
Furthermore, while in 2016, two-thirds of all cryptocurrency hacking volume came from Bitcoin, by 2022, this figure has dropped to just under 3%. Ethereum (68%) and BNB Smart Chain (19%) bridged the gap, said.
At the same time, TRM Labs claimed that Bitcoin was also the “exclusive currency” of terrorist financing at the time, but by 2022, it has “almost been replaced by Tron” at 92%.
Additionally, TRM Labs claims that Tether (USDT) usage among terrorist financing entities it tracks will increase by 240% in 2022.
The latest illicit financial data in the cryptocurrency space could be good news for bitcoin, which seems to be back in the discussion of institutional adoption in recent days.
However, according to TRM Labs, in 2022 at least $7.8 billion of the cryptocurrency will be funneled into Ponzi and pyramid schemes, as much as $1.5 billion into darknet markets specializing in drugs, and $3.7 billion through DeFi hacks. and exploits are stolen.
related: North Korea and criminals are using DeFi services to launder money
Earlier this year, Cointelegraph reported that 2022 would set a new record for illegal crypto transactions. The total value of cryptocurrencies received by illicit addresses exceeded $20 billion last year, according to analytics firm Chainaanalysis.
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