Bitcoin and illegal activities

[Ryutaro]

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. 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.


source: https://blog.chainalysis.com/reports/cryptocurrency-crime-2020-report

[Yaunfitda]

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.

[LTU_btc]

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 .

[Harlot]

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.

[Gozie51]

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.

[tippytoes]

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.

[Slow death]

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

[20kevin20]

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.

[FanatMonet]

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.

[Oceat]

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.

[Rengga Jati]

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.    

[coupable]

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.

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.

[pixie85]

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.

[Little Mouse]

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.

[pooya87]

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.

[senin]

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.

[ReiMomo]

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.

[Fesatmas]

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.

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.

[witcher_sense]

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.

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


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.

[Meowth05]

source: https://blog.chainalysis.com/reports/cryptocurrency-crime-2020-report

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.