Article source: Bitrace
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, while the criminal industry has also begun to increasingly utilize crypto infrastructure to optimize their operations or create new paradigms for crime. This report aims to statistically disclose the scale of major types of cryptocurrency crimes and clarify the impact of compliance facilities on the scale of the criminal industry, calling for the industry and government to pay attention to the harms caused by cryptocurrency crime.
Due to space limitations, this article only presents some conclusions and data from the report. You are welcome to visit the Bitrace official website to download the complete version.
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The situation of cryptocurrency crime remains severe
Stablecoins received by high-risk addresses
Considering that risk activities mainly occur in the Ethereum and Tron networks, Bitrace defines blockchain addresses used by illegal entities to receive, transfer, and store stablecoins (erc20_usdt, erc20_usdc, trc20_usdt, trc20_usdc) in these two networks as high-risk addresses. In the past year of 2024, the total amount received by such high-risk addresses reached 649 billion US dollars, slightly higher than the previous year.
Proportion of high-risk activities in the total stablecoin trading scale
Based on trading volume, this portion of high-risk activities accounted for 5.14% of the total stablecoin trading activities that year, a decrease of 0.80% compared to 2023, but still significantly higher than in 2021 and 2022.
Stablecoins classification received by high-risk addresses
Based on the type of stablecoin, from 2021 to 2024, USDT on the Tron network has held the largest share. However, in 2024, the shares of USDT and USDC on the Ethereum network have both increased.
The scale of gambling continues to grow
Stablecoins collected by gambling platforms
In 2024, the funding scale of online gambling platforms and the payment platforms providing deposit and withdrawal services for them reached 217.8 billion US dollars, an increase of over 17.50% compared to 2023.
Classification of stablecoins received by gambling platforms
Statistics on the types of stablecoins used by gambling platforms show that the share of USDC in 2024 has significantly increased to 13.36%, far exceeding the 5.22% in 2023. This indicates that as USDC's market share increases, its adoption in the online gambling sector has also greatly risen, despite being issued and regulated by compliant entities.
The scale of black and grey market trading remains unchanged
Stablecoins received by black and grey market trading addresses
In 2024, business addresses related to black and grey market trading in the Ethereum and Tron networks received over 278.1 billion US dollars, slightly higher than in 2023, while the trading scale in these two years far exceeds that of 2021 and 2022.
The cryptocurrency guarantee trading platforms are inextricably linked to the development of the black and grey markets, as these institutions can almost provide guarantee services for all links in the black and grey industry, establishing trust among criminals.
Good Fortune Guarantee receives stablecoins
The rise of Good Fortune Guarantee and its competitors in Southeast Asia has unfolded alongside the gradual popularization of stablecoins in local real economic activities. This trend is particularly evident in 2024, when its business scale had expanded to 2.64 billion US dollars by the fourth quarter.
The scale of cryptocurrency fraud has surged dramatically
Stablecoins received by fraud addresses
In 2024, blockchain addresses associated with fraudulent activities saw explosive growth in the scale of stablecoins received. Compared to 2021-2023, the funding scale that year reached 52.5 billion US dollars, exceeding the total of previous years.
However, this remarkable growth trend may not be entirely accurate, as statistical values are constrained by the statistical methods of security vendors and the rising levels of fraud among illegal entities. For instance, as security vendors support many new public chains, more criminal incidents can be observed, which means that past incidents may not have been included in the statistics; incidents occurring within centralized institutions and those not disclosed by victims also cannot be included in the statistics.
With improvements in statistical methods and an increase in case disclosures, the data in next year's investigation report will grow further.
The scale of money laundering begins to shrink
Stablecoins received by money laundering addresses
In 2024, blockchain addresses associated with money laundering activities received a total of 86.3 billion US dollars worth of 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 cryptocurrency industry.
Proportion of money laundering stablecoins collected by major centralized trading platforms
Considering that centralized exchanges have a unique advantage in terms of fund conversion compared to other entities, they are more easily favored by money laundering groups. Bitrace conducted a fund audit on the hot wallet addresses of major centralized cryptocurrency trading platforms.
Similar to the investigation in the fraud section, the scale of funds received by platforms for money laundering is generally proportional to their business scale, but OKX's share has significantly decreased in recent quarters, which may be a result of its compliance operations.
On-chain freezing activities of stablecoins have increased significantly
The number of stablecoins frozen by Tether and Circle
2024 is a year when stablecoin issuers actively cooperate with law enforcement. Tether and Circle froze over 1.3 billion US dollars worth of stablecoins on the Ethereum and Tron networks, double the scale of the previous three years.
Stablecoins received by frozen addresses in that year
Statistics on the fund transfer activities of frozen addresses show that the transaction scale in 2024 reached 12.9 billion US dollars, remaining basically flat compared to 2023. This indicates that on-chain cryptocurrency criminal activities have been active for several years, but only began to be effectively targeted in 2024.
*It is worth emphasizing that not all driving factors for frozen addresses are related to involved cases. In this statistic, Bitrace did not exclude this part, so the actual scale may be slightly smaller.
Trends in OFAC and NBCTF sanctions
Stablecoins received by addresses associated with OFAC and NBCTF sanctioned entities
The Office of Foreign Assets Control (OFAC) under the US Department of the Treasury and the National Bureau for Counterterrorism Financing (NBCTF) in Israel are two agencies related to sanctions and counter-terrorism financing. They have extensive cooperation in combating terrorist financing and financial networks related to terrorist organizations (such as Hamas). The overall funding scale related to sanctioned entities disclosed by these two organizations reached its peak in 2022 and has since declined year by year.
Although regulatory measures from government departments can have a significant impact on the businesses of sanctioned entities, they have little effect on criminal groups using these infrastructures for illegal activities, as the anonymity and non-traceability of cryptocurrency technology make it difficult for such entities to be sanctioned and highly substitutable. Regulatory authorities should conduct more in-depth investigations into cryptocurrency crimes and take corresponding law enforcement actions against criminal groups.
Regulation brings positive impact to Hong Kong
2024 is a year of accelerated compliance for the cryptocurrency industry. Globally, the attitudes of major regulatory agencies towards cryptocurrencies have shifted from wait-and-see to more proactive intervention, promoting the industry towards a more regulated and transparent direction. Taking Hong Kong as an example—
Hong Kong's compliance policies have built a safer and more controllable cryptocurrency 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. For cryptocurrency entities, although compliance costs increase in the short term, they significantly reduce the likelihood of funds being exposed to uncontrollable risks in the long term.
Proportion of high-risk funds in stablecoin income of Hong Kong Web3 entities
A fund analysis of VATP and VAOTC addresses serving 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 following the release of compliance policies and several landmark cryptocurrency-related cases, local stablecoin trading activities related to risk have been effectively suppressed.
Summary
The year 2024 is a year of comprehensive revival for the industry, as well as a year when major economies begin to take the industry seriously. Although the scale of cryptocurrency crime remains unchanged, top-down compliance regulatory policies and bottom-up industry self-discipline have brought positive impacts to the cryptocurrency industry in certain countries or regions.
The industry will welcome a safer and more trustworthy future, which we believe is self-evident.