The year 2024 is a milestone year for the Web3 industry. The market capitalization of crypto and the adoption of industry infrastructure have both reached unprecedented heights. At the same time, the crime industry has begun to utilize crypto infrastructure more to optimize their operations or create new paradigms of crime. This report statistically reveals the scale of major types of crypto crimes and clarifies the impact of compliance facilities on the scale of criminal activities, calling for the industry and government to pay attention to the harm caused by crypto crimes.
Due to space constraints, this article only presents part of the conclusions and data from the report. You are welcome to visit the Bitrace official website to download the full version.
The situation of cryptocurrency crime remains severe
Considering that risky activities primarily occur on the Ethereum and TRON networks, Bitrace defines blockchain addresses used by illegal entities to receive, transmit, and store stablecoins (erc20_usdt, erc20_usdc, trc20_usdt, trc20_usdc) on these two networks as high-risk addresses. In the past year of 2024, the total receipts of these high-risk addresses reached $649 billion, slightly higher than the previous year.
Based on transaction volume, this portion of high-risk activities accounted for 5.14% of the total stablecoin transaction activities for the year, a decrease of 0.80% compared to 2023, but still significantly higher than in 2021 and 2022.
Calculating by the type of stablecoin, from 2021 to 2024, USDT on the TRON network has maintained the largest market share. However, in 2024, the market share of USDT and USDC on the Ethereum network has increased.
The scale of online gambling continues to grow
In 2024, the funding scale of online gambling platforms and the payment platforms providing deposit and withdrawal services for them reached $217.8 billion, an increase of more than 17.50% compared to 2023.
Statistics on the types of stablecoins used by online gambling platforms show that the market share of USDC in 2024 has significantly increased to 13.36%, far higher than 5.22% in 2023. This indicates that as USDC's market share increases, its adoption in the online gambling industry has also greatly improved, despite being issued and regulated by compliant entities.
The scale of black and gray market transactions remains unchanged
In 2024, the business addresses related to black and gray market transactions in the Ethereum and TRON networks collectively received over $278.1 billion, slightly higher than in 2023, while the transaction scale for these two years far exceeds that of 2021 and 2022.
Closely related to the development of the black and gray markets are cryptocurrency guarantee trading platforms, which can almost provide guarantee services for all links in the black and gray market supply chain, establishing trust among criminals.
The rise of Good Wealth Guarantee and its competitors in Southeast Asia coincides with the gradual popularity of stablecoins in local real economic activities. This trend was particularly evident in 2024, with its business scale expanding to $2.64 billion in the fourth quarter of that year.
The scale of crypto fraud has surged dramatically
In 2024, blockchain addresses associated with fraudulent activities saw an explosive growth in stablecoin receipts. Compared to 2021-2023, the fund scale for that year reached $52.5 billion, exceeding the total of previous years.
However, this astonishing growth trend may not be entirely accurate, as the statistical values are limited by the statistical methods of security firms and the rising levels of fraud among illegal entities. For example, as security firms support many new public chains, more criminal incidents will be observed, meaning that past incidents may not have been included in the statistics; incidents occurring within centralized institutions and those not actively disclosed by victims are also not included in the statistics.
With the improvement of statistical methods and the increase in case revelations, this batch of data will further grow in next year's investigative report.
The scale of money laundering is beginning to shrink
In 2024, blockchain addresses related to money laundering received a total of $86.3 billion in stablecoins, slightly lower than in 2023 and on par with 2022. This figure may indicate that significant law enforcement activities and regulatory legislative actions by major policy entities over the past two years have effectively suppressed the money laundering crime situation in the crypto industry.
Considering that centralized exchanges have a unique advantage in fund monetization compared to other entities, they are more likely to be favored by money laundering gangs. Bitrace conducted a fund audit of the hot wallet addresses of major centralized cryptocurrency trading platforms.
The results are similar to the investigation in the fraud section; the scale of funds received for laundering by the platform is generally proportional to its business scale, but OKX's proportion has significantly decreased in recent quarters, which may be the result of its compliant operations.
A significant increase in on-chain stablecoin freezing activities
2024 is a year in which stablecoin issuers actively cooperate with law enforcement. Tether and Circle collectively froze stablecoins worth over $1.3 billion in the Ethereum and TRON networks, which is double the amount frozen in the previous three years.
Statistics on the fund transfer activities of frozen addresses show that the transaction scale in 2024 reached $12.9 billion, which is basically on par with 2023. This indicates that on-chain crypto criminal activities have begun to become active several years ago, but effective measures to combat them only started in 2024.
It is worth emphasizing that not all driving factors for frozen addresses are related to involved cases. In this statistic, Bitrace has not excluded this part, so the actual scale will be slightly smaller.
Trends in OFAC and NBCTF Sanctions
The Office of Foreign Assets Control (OFAC) under the U.S. Department of the Treasury and the National Bureau for Counter Terrorism Financing (NBCTF) of Israel are two agencies related to sanctions and counter-terrorism financing. They have cooperated extensively in combating terrorist financing and financial networks related to terrorist organizations (such as Hamas). The overall fund scale related to blockchain addresses exposed by these two organizations reached its peak in 2022, and has been declining year by year since then.
Although regulatory measures by government departments can have a huge impact on the business of sanctioned entities, they have little effect on criminal groups engaging in illegal activities using these infrastructures, as the anonymity and non-requirement attributes of crypto technology make it difficult for these entities to be sanctioned and highly replaceable. Regulatory authorities should conduct more in-depth investigations into crypto crimes and take corresponding law enforcement actions against criminal groups.
Regulation brings positive impacts to Hong Kong
2024 is a year of accelerated compliance in the crypto industry. Globally, major regulatory bodies have shifted their attitudes towards cryptocurrencies from wait-and-see to more active involvement, promoting the industry towards a more standardized and transparent direction. Taking Hong Kong as an example—
Hong Kong's compliance policies have created a safer and more controllable crypto ecosystem through clear legal requirements, customer fund protection, combating illegal activities, attracting institutional funds, and aligning with international standards. This not only reduces direct financial losses caused by hacker attacks, platform bankruptcies, or legal penalties but also lowers indirect risks by enhancing market trust and stability. Although compliance costs for crypto entities increase in the short term, they significantly reduce the likelihood of funds being exposed to uncontrollable risks in the long term.
Funding analysis of VATP and VAOTC addresses that mainly serve Hong Kong customers shows that after the third quarter of 2023, the proportion of risk stablecoins flowing into the local area sharply decreased. This indicates that after the release of compliance policies and several landmark cases involving cryptocurrencies, local stablecoin trading activities related to risky activities have been effectively suppressed.
Summary
2024 is a year of comprehensive revival for the industry and a critical year for major economies to begin to face the importance of the industry. Although the scale of crypto crime does not decrease, top-down compliance regulatory policies and bottom-up industry self-discipline have brought positive impacts to the crypto industry in some countries or regions.
The industry is set to welcome a safer and more trustworthy future, which we believe is self-evident.
This article is reproduced with permission from: (ForesightNews)
Original author: Bitrace
'2024 Cryptocurrency Money Laundering Scale Shrinks! Hong Kong Regulation Works, Is the Industry Transitioning from Gray Market to Regular?' This article was first published in 'Crypto City'
