CipherTrace: Criminal Bitcoin Turns to Mobile Payments Solutions

October 15, 2024         By: Steven Anderson

One of the biggest issues stopping cryptocurrency from going mainstream is the perception that it’s largely the province of criminals. A new report from CipherTrace suggests that the efforts undertaken to prevent the criminal element from taking advantage of cryptocurrency actually are working.

The CipherTrace report noted that almost every scrap of bitcoin received from criminals was routed to cryptocurrency exchanges that didn’t have much in the way of regulation. Fully 97 percent of that cryptocurrency hit said weakly-regulated exchanges. Though even with all that, less than five percent of all bitcoin that goes to these poorly-regulated exchanges comes from from criminal activity. That’s a scant portion, but the amount is substantial in the objective sense: around 380,000 bitcoin, worth about $2.5 billion at current rates.

There’s enough crime going on in the cryptocurrency sector, however; just in the first three quarters of this year, nearly $1 billion of cryptocurrency had been reported stolen by exchanges. Just since the second quarter, $166 million had been stolen. By the end of the year, that “nearly” $1 billion is expected to fully clear that nine-figure mark.

CipherTrace’s CEO and APWG.org’s co-chair of the Cryptocurrency Working Group, Dave Jevans, noted “This extensive research shows that regulation does have a direct correlation in hindering criminal activity, and we are on the right track to instill further trust in the crypto ecosystem. We will see the opportunities to launder cryptocurrencies greatly reduced in the coming 18 months as cryptocurrency AML regulations are rolled out globally.”

This demonstrates, more than anything, that regulations actually do work. Since most criminal-related cryptocurrency goes to places that have minimal regulation, it reduces the chances of detection and interdiction. For the criminal, it’s safer. While crime will never be completely eliminated in the cryptocurrency market, it’s clear that the use of regulations can and does help.

With regulations demonstrating their value, hopefully the road to mainstreaming cryptocurrency will get just a little shorter and a little smoother. It will be hard to think of cryptocurrency as strictly the province of criminals when it becomes clear that so little of it is actually in their hands.