Bitcoin Forum

Most of us always question if bitcoin is the best refuge for criminals and scammers and activities such as stealing funds, money laundering, terrorism financing and all sort of illegal activities.

The reality is that a total of 11.5$ billion worth of cryptocurrencies were associated with criminal activity which represents only 1.1% of cryptocurrencies transaction volume in 2019  according to chainalysis (https://blog.chainalysis.com/). The graphic below tells us that the most common type of crimes is not money laundering nor terrorism financing, it is the act which we all see every day: scamming.

Share us your thought about this matter and if someone knows any other resource that can give us a more detailed view, please provide it.

Edit: moving the topic to Beginner section for more help.

https://assets.website-files.com/5a95e929b010650001bae4c6/5e31098acc84ba5d58fe659f_sky104tFZhjeHB74unItLBbNtgwBjwz9BJq8JZfqiu4gkbjCLBzOZv5FubvxYGYFaObnm2OFZS41P3pJ635UNOysTkIsSlazjTOw5I0SB8IWdsp5wXmAwN4u7ugwUZ8ZxNvaN-4b.png
source: https://blog.chainalysis.com/reports/cryptocurrency-crime-2020-report

It's pretty obvious though, you just have to look at the recent scams that PlusToken has pulled-off, which roughly to be estimated around $2 billion worth of crypto's including BTC, ETH, USDT and OMG.

And then we have the usual scams, fake-giveaways and now, cyber criminals are using the covid-19 hysteria to jump on and take advantage of people's emotions. I'm sure the community is doing everything to warn people of a possible scam, but I guess the market is really big that it is hard to cover, plus we still have a lot of gullible people, who also thinks that they are smarter and can get easy money. But they really don't know that scammers are really out there, trying to lure and milk them in which every way they can.

If these numbers are real, 1.1% is almost nothing. I have no idea how they made this research, but I thought that these numbers would be much bigger, maybe between 10%-20%. But I think that these numbers might be a bit bigger than just 1.1% because some illegal activities might be hidden by mixers (unless it's also counted in this research). Also, often there is simply now way how they can know that these BTC were used for bad purpose.
But even if these stats aren't 100% accurate, it blows stereotype that one of the main use of Bitcoin is illegal activities.
Probably fiat cash have much bigger rate :).

If this was true then it is absolutely ridiculous to think on why the government is always pinpointing the criminal activities involved in the crypto industry as if it was the biggest concern on as acting out a vehicle for crimes to happen. The funny thing about this one is they always left out scams when they are talking about illicit activities they always focus more on money laundering and tax evasion and drug payments and nothing about scams that victimize people within the the industry. It really makes you wonder on why they are pushing on things they really don't know about yet they act as if it is the main threat on the criminal world. Lets just hope this analysis becomes mainstream so that these politicians would shut their mouth about crypto being a tool for crime.

The anonymous advantage of bitcoin is what makes it look like a shady activity enabled because fiat can't really do such an activities otherwise it would be labelled as money laundering. However, whether genuine businesses thrive with both or not, some people have zeroed their minds on a negative outcome and not for positive but for me, I look at the positive which is that it is convenient to transact whenever you are.

I can agree with that, the ease of transaction is mainly the advantage for me when you are talking crypto. Based from the OP's graph, the large contributing part are scams and I think that's true. So many crap and scam projects, promising overwhelming returns, etc. but they will disappear once they got their money. This is the sad reality in crypto. But they are lessening now as less and less investors are joining these ICOs, IEOs, STOs or whatever your call it and especially now that we are in crisis. I hope these crap projects will be gone forever.

I think it is very difficult to estimate how many crimes are committed involving bitcoin, I do not know how genius these people are who did this research. But in my honest opinion I think that on the dark web people prefer to use more bitcoin and if we had a precise number we would be shocked. Don't get me wrong, I like bitcoin and I need to be clear that the problem is not in bitcoin, the problem is in people

Take the USD for a second and imagine it was 100% transparent and anyone could fully analyze anyone's wallet. How much USD and fiat overall do you think is used in illegal activities? I'll tell you it's a ton of money and fiat is still alive and doing well overall (ignoring the pandemic and economical downfall).

Same goes for jewelry and precious metals. You can't really compare how BTC is used for illicit activity with fiat because fiat doesn't have an entire damn history of where every single penny has been. This "BTC is used by criminals" shit is old and utter bullshit. Anything is used by criminals and they'll never cease to exist.

Cryptocurrencies can never be compared with ordinary fiat money in this matter in terms of volume, although we can often hear about various crimes with cryptocurrencies, this is mainly fraud, although transfers to various drug cartels and terrorists are also quite common.

The source is quite unreliable though but I'll give it a credit for that although most of these numbers are not really the right number as I was expecting. Bitcoin and other cryptocurrencies are already one of the source of these criminal activities around the globe and I think it is not just only in cryptocurrencies since there are wide scams in fiat too such as the investment scam also known as hyip.

I think we need more sources to validate the data above. And we need a longer time period to ensure the conclusion, not only from 2017-2019. I think we need more data before 2017, it should also be involved to get complete data. However, I am pretty sure that the percentage of illegal activities using Bitcoin isn't as much as haters said. They just did it to make a bad reputation for Bitcoin and crypto. Although they sometimes said with great confidence, we know that they don't have valid data.  ;D  

This is far to be compared. Criminal activities are required to use the most anonymous method they find in the market. However, criminals represent just a little portion from the total number of bitcoin users.

If it's really 1 or 2% then it's much less than fiat. Cash has always been the choice of criminals especially drug lords. Pablo Escobar had millions of dollars buried in the fields behind his houses and hidden inside walls.

The Dollar is the currency behind everything illegal. Bitcoin doesn't even compare to that.

It would be good to see a data comparison of cryptocurrency vs fiat and their perspective illegal activities. 1% will not be a big deal when we compare it with fiat money. With fiat, a huge percent of illegal activities is going on.

first of all a report published by a blockchain analysis business is not a reliable source of information specially chainanalysis since they always exaggerate all their results and they do it to advertise their business and attract potential clients. not to mention that there is always a huge margin of error in what they have been doing.

secondly, you should compare it with fiat. for example how much fiat is being used in illegal activities. i'd say for every $1 worth of bitcoin there is $1 million US dollar that goes into illegal activities such as money laundering and funding terrorism.

Earlier, studies were conducted in the USA and Europe on the role played by bitcoin in the illegal use of funds among the entire cryptocurrency. It turned out that only about eight percent of cases of illegal transactions in cryptocurrency belonged to using bitcoin. Most of the illegal transactions were using anonymous coins. It also provides data that only 1.1 percent of all transactions in all currencies are owned using cryptocurrency. Of course, this figure is not very large. We can say that there are no problems in this regard and Bitcoin is mainly used for its intended purpose.

I think not the only Bitcoin is involved in illegal activity, you also consider that fiat can be used for illegal activity and both of them are prone to these crimes. Not Bitcoin was involved to scam as we see on data that it was a huge number of cases, I think those scam projects like last year that almost ICO's projects turn to scam. But how sad that it was affected by the name of Bitcoin.

There are still many people who do illegal in crypto transactions, they use it for their own interests and also acts of cheating in various ways, for example, scamer who continues to deceive people into selling tokens or other things.
But no one would have thought that even crypto is often used for crimes in funding terrorists, money laundering and other fraudulent matters so this transaction is still polemic until now because some countries are still afraid of it, could the state be able to control the blockchain so I sure they will implement it to become a mass adoption.

The research is already done by Messari, it turns out that fiat is used in illegal transactions much more often.

https://www.ccn.com/wp-content/uploads/2019/07/Messari1.jpg
https://www.ccn.com/fiat-money-outpaces-bitcoin-by-8001-for-nefarious-activities-report/

In my opinion, the reason bitcoin remains not so popular among criminals is transparency of blockchain and its ability to keep information about any activity forever. While cash transactions are barely trackable due to impossibility of recording numbers of all "taint" banknotes, bitcoin blockchain is always open and everything is recording by default. Despite the fact that there are many available methods to obfuscate transactions in bitcoin, all information is still open and forever written. As blockchain analysis methods are constantly being improved, it becomes possible to interpret past transactions.

I understood your point but the graph is very hard to understand, thereare overlapping colors which makes the graph confusing. If you can provide a cleaner bar graph many will appreciate. I am sorry that I don't understand the graph that you provided but this is a good insight on what is going on with the crimes and illegal activities that uses bitcoin.

Oh well, the data shows clearly how cryptocurrency used in illegal ways. That is why it is not yet fully accepted because of that reason. It can be a tool for scamming innocent people and the anonymous transactions make them to urge this kind of act. No meet ups for transactions and that is their way of exchanging cryptocurrency into fiat. If you also noticed, crypto payments were also used in black market.
 
 Anyway, even not in cryptocurrency. Scammers really exists when there is money involved and they just find cryptocurrency as the target because of the hype and it is started to become known by the people.

That's quite sharp for a spike in the charts.
I never expected that there would be more scammers rather than criminals using Bitcoin like those people in the dark web that uses Bitcoin to buy illegal stuffs and services.
Since anonymity comes in hand in Bitcoin, this is pretty much half unsurprising already. Like there would even be paid course I saw in a banner out here to teach how to use Bitcoin while you can use the internet to learn it by yourself for free.

Indeed. It is really hard to believe, but it is all true because bitcoin was first known in the dark web and in the black market that it is being used as a mode of payment in illegal activities such as selling drugs, armed guns, and other illegal stuffs, that is why other countries don't want to accept cryptocurrency.

not surprising as we know if it will benefit their illegal activities, they will be using it

Hehe, daily transactions in BTC are about 2 billion. Let's say that not 1% but 0.1% are illegal. It would come to 2 million.
So, if it's a 1:1 000 000, each day we have 2 trillion (annual GDP if Spain) in funding daily terrorism and money laundering.
Or 700 trillion a year which is simply 10 times the world GDP.  ;D

Why do we always have to compare bitcoin with fiat and paint it like were angels or something?

Gold is used for smuggling, silver is used to launder money, alcohol and cigarettes are used for bribery in my country during communism, now toilet paper and disinfectant are used  ;D you can't stop it.

Shit is happening and it will happen..better ignore it altoghether


Yeah, those guys at chainanalysis are really annoying, there is no month when they won't come with some 'report" how they uncovered this and that..
When it comes to the real stuff, they fail on tracking anything beyond "the hacker then sent coins to binance"....

If someone thinks crypto ban will reduce the amount of laundering and darknet traffic, he's silly. Crypto is just a tool, all the crimes are made by people, if crypto won't work, they'll switch to something else.

Actually yes Bitcoin transactions hide scammers and  influence the uses on the black market , but this market exist before 2009 when it was the discovery of Bitcoin and blockchain, in general, this is not a strong factor for not accepting Bitcoin

You're right

thanks for posting this. I was looking for something similar regarding cash comparison to bitcoin regarding illegal activity. I would estimate a much higher % attributed for illagal activity using cash. Cash has no blockchain and is like bearer bonds imo.

because i love giving exaggerated stats in response to exaggerated topics that are throwing big ass numbers around based on nothing. besides it is not far fetched either, you say 0.1%, i say it is far less than that. CMC reports bitcoin trading volume in past 24 hours is $43 billion, most of that $2 billion is from traders that are running around like headless chickens.
besides, terrorists raise funds through extortion (local currency), taxation (local currency), selling oil (USD), robbing (various fiat) and receiving government support from countries such as US, UAE,... (again in USD). none of these methods are using cryptocurrencies!

That's merely an excuse to ban anything. Almost every advanced technology has been used in criminal activity. Advanced technology is being used by criminals right now. No one trying to ban them, because not only bad people use technology, but everyone else, common people. If every new invention used by criminals had experienced ban or other serious impediments,  we would live in cold caves today. We wouldn't have evolved as society at all. Banning anything that may be useful for humanity leads to degradation of society.

I don't think that the amount of Bitcoin used for illegal activities can actually be know because illegal activities are private and people can't know if or when it happens or how much of Bitcoin was used for the transaction.

People need to get smart about things and not fall for silly scams like they do. Crypto being used for illigal activities is one of the few things people who dislike bitcoin can use against it. People are always doing that. These are not reasonable people to begin with and their opinions should be void. I've never heard of a drug dealer accepting bitcoin xD People say you can buy drugs with bitcoin. You can also do that with fiat and online too. The bank won't know what you are buying they will only know how much you sent. A bitcoin wallet can be traced so it is more risky.

Cybercrime is one of the most fearsome crimes we know. There are lots of ways for illegal traders and identity thieves to get through our barriers and feed on our social and accounts. I am seeing news on tv about scammers greedily wanting for money in any sort of way. This 1.1% stats mean a lot also when we are talking about cryptocurrency. Most scammers now know the power of digital trading and being the person that they are, they attack vulnerable people such as those people who are easily fooled, newbies, and even those who believe with easy money. Protection and caution must always be exercised to avoid future graphs increasing like this.

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How can you say that fiat can't really do that? Way back, even without crypto currrencies, fiat is being used to launder money, to scam people, to hack to computers and take their bank accounts or other accounts to applications that could take their money, it is still being done using fiat. It is said that 2-5% of the global GDP is being laundered, we can't say that they are using crypto currencies but I don't think they are. Comparing to the chart the OP used, $11.5 billion are associated with criminal activities, and not all of them are being laundered, while the money being laundered globally is 2-5% of the global GDP which is $800 billion - $2 trillion in current US dollars. (https://www.unodc.org/unodc/en/money-laundering/globalization.html) Looks cute, isn't it? We're not even talking about other criminal activities such as scam and hacking.

We constantly hear negative news about cryptocurrency and how they use cryptocurrency in illegal activities, tax evasion and crime financing.  On the other hand, many cryptocurrency users oppose the provision of passport data and control by the government and express their opinion that cryptocurrencies, in particular bitcoin, do not need legalization, since today cryptocurrency is already fully used by people.  But I believe that the words "fully", This is a wrong definition of the current situation, since we are only at the very beginning of the development of the entire cryptocurrency market.  I believe that without a certain control of crime and fraud with the help of cryptocurrencies will increase and this must be put to an end.  In order for the government not to make negative statements against cryptocurrency, cryptocurrency must be recognized as digital assets and a means of payment, so that the relevant regulatory authorities can protect not only the state from crime, but also protect cryptocurrency users, since on the one hand, cryptocurrency provides unlimited possibilities for a person, But with  on the other hand, a person who owns cryptocurrency at any time may suffer from an attacker.

In every kind of currencies whether it's fiat or in the form of digital money, you will always find some fraudster who wanted to take advantage of every situation like what we have seen in the crypto industry. In the meantime, let's just think that this kind of situation is normal in the crypto industry because they are not yet fully validated in most parts of the world. that's why we always see some flaws like this one. criminals are often using cryptocurrencies for their shady transactions.

The thing is , even when you consider Currencies that we are using , one cannot put a tag on how the paper money itself is being used , it is really impossible to find the criminal activities which are fuled by money itself so Fiat is much worse than us .
So whenever anyone says that Bitcoins is for criminal activities your should tell them how , the Fiat you are so sure of is no better .
It is even worse..... You cannot stop people who want to find opportunities to engage in dirty work , they will do so no matter what.

Talking about Illegal  activities running through the web are widespread specially on darkweb and deepweb.
The Iceberg itself talks about how many transaction are running daily.
 Cryptocurrency is the main Tradeable asset that can be used on daily transaction Basis and Bitcoin is the main course.

it looks like that they are mainly categorizing the exchange hacks under "scams" which is also why the total value of it is so huge. if you look at the spikes on that chart you can also see that they coincide with big exchange hacks. one is in 2017 which i forgot what exchange was hacked but a lot of them had lots of issues like that and the other is in 2019 when Binance was hacked around May.

I also noticed this, I guess it's a way to cement the thought that bitcoin's anonimity is "bad for you because only criminals would want that", also it doesn't help much that media overblew sites like silkroad instead of focusing on the more benign aspects of bitcoin. But unfortunately in current times what pays is clickbaity titles and sensationalized stories. Most people who want to learn about crypto and the good things about it usually do it on their own. Though I appreciate whenever big medias do mention bitcoin in a better light (not counting when price is pumping like crazy)

Exchanges are usualy at the first place when such type of crime is concerned and the amount is usualy high so that gives an extra accent. However, there are a lot of cryptocurrencies connected crines, frauds and illegal activities that are not recored somwhere n
To my opinion real numbers and damage are much higher that shown in any chart or statistics so it's hard to estimate the whole range of losses and victims.

Thanks for sharing this data. I knew that Bitcoin is not used mainly for illegal activities, but seeing the numbers is more reassuring. However, I wonder how this data is collected since surely a lot of crime goes unnoticed (I mean, transactions appear on the blockchain, of course, but nobody knows who they belong to and what they mean). I am also interested in the percentage of fiat money used for crime purposes for the sake of comparison, but yet again I am sure that gaining objective data on such a matter is quite problematic.

Well scams and hacking incidents are quite far from each other. Scamming is more likely can be done easily, you just need a group of people and flowery words for gullible people unlike hacking these were the doings of those computer system geeks, black computer science, all that surrounds the breaching space. The hacking incident with binance last year was so huge that it worth $40 million dollars, imagine those hackers were able to buy a lambo without waiting the btc pump haha. But Binance is also huge it is just a little part of them, $40 million is just like a nail to them.

To me this is not really surprising, most of the transactions made in the market are clean and are done by honest people just trying to use this new technology, the idea that cryptocurrencies are only being used by criminals and people like them is nothing but a myth created by the governments to scare people away from this market because they know they cannot really compete with bitcoin and its characteristics as their fiat currencies are created with the idea of benefiting powerful people like them while bitcoin benefits everyone else.

I think if we are actually looking at a cryptocurrency that is used for illegal activities then i think privacy coins are the ones that used mostly on the darkweb. Coins like DASH and Monero are used mostly.

People take advantage of the anonymity of the crypto to perpetuate evil and that is exactly why I somehow support KYC verification. A week cannot past without a crypto scam being announced. This shows that people are rapidly using crypto negatively. Just a few weeks ago, Some criminal requested for bitcoin to be paid as ransom for kidnapping a boy.

I think bitcoin is motly used too in the darkweb. Despite the not-totaly-anonimity of bitcoin, it is still used in the darkweb, in fact a lot of criminals selling illegal drugs in there is caught and the bitcoins used were taken from them. Though, these totaly anonymous coins are also used too.

You sure the stats are accurate and taken/collected from a credible source? Yeah, 1.1% is actually really small  and is almost negligible when compared to the illegal activities that take place using fiat currecy. Trust me its only the naysayers that try to convince people that bitcoin and crypto currencies are devils creation that can be used for committing criminal activities. To be honest, they are actually all butthurt. They regret for not joining the community and invest on cryptocurrencies when the prices were cheap. They act like fiat currencies are never used for doing illegal activities, but little do they know most of the corruption and illicit acts takes place using fiat currency.

If the dollar is behind everything illegal, why some people and politicians like to refer to bitcoin as the bad boy doing illegal things when in reality it is FIAT (dollar) the main one at this time causing problems in society.

Some people like to say so because they don't even know how bitcoin works and their first reaction is that easy one.

Because people who have evil intents also have innovation, they understand now about how bitcoin works and they will take advantage of it like it can't be tracked. Yes i understand that dollar or fiat is the main cause of problems in our society but it is because it existed long time ago and it is an essential need but bitcoin only existed for like 10 years so it is obvious that we can't really compare the both but in the time now where technology is in our grasp bitcoin have a very high possibility to be used in illegal activities, but it doesn't mean bitcoin is bad, it only look bad once evil people used it just like the fiat, both bitcoin and dollar is not a bad thing, it is the people who makes it look bad, it is how we used it.

I actually took that from the value of bitcoins transferred from one address to another as trading isn't really a transfer between entities unless you withdraw from an exchnge ...which..comes as a tx :D


And when there will be no more fiat, will those activities cease?
Have they existed before the us dollar, have they existed before paper money?
Will they exist in a world with only cryptos?
I guess it's a no, yes, yes and yes.  ;D

What is with this whataboutsim? If a kidnapper is demanding bitcoins in payment there are hundred saying, but what about the ones demanding fiat? Is somebody scamming with cryptos, but what about those scamming with fiat?

I don't get why people are so triggered and immediately try to show something that is worse than bitcoin, as I said before, yeah, it's used in various ways, evil and good, does it make it bad or good? It's just a tool and a piece of code, people will use it as they see it fit. You can't have a thing that protects your money from confiscation by the government used only by people that pay their taxes in full willingly  ;D