Crypto’s criminal reputation is outdated, misleading

By Nigel Green

Crypto has gained mainstream attention in recent years, but with this rise in popularity has come persistent myths about their association with criminal activity. 

Critics, especially in political and regulatory circles, often paint digital assets like Bitcoin as the “preferred tool” for terrorists, ransomware gangs, and drug dealers. 

But a closer look at the data reveals that this narrative is far from accurate. 

In reality, the proportion of crypto transactions tied to illegal activities is remarkably small and shrinking, especially compared to the scale of crime in traditional financial systems. 

As such, the idea that crypto is primarily used for criminality is not only outdated but also misleading.

Decreasing percentage of activity

The 2024 Crypto Crime Report by Chainalysis, a leading blockchain analysis firm, sheds light on the true extent of criminal activity in the crypto world. 

According to the report, only 0.34% of all cryptocurrency transactions in 2023 were related to illicit activities. This marks a significant decrease in criminal transactions, which have been steadily declining as a share of overall crypto activity. 

In 2023, crypto addresses linked to illegal activities transferred $22.2 billion worth of cryptocurrency, down 29% from $31.5 billion in 2022.

When put into perspective, these figures demonstrate that the vast majority of crypto transactions—over 99.5%—are used for legitimate purposes. 

As the crypto ecosystem matures and regulatory frameworks improve, these numbers are expected to decline even further.

One of the strongest arguments against the myth of crypto being a hub for crime comes from comparing it to the conventional financial system. 

The amount of money laundered through traditional banking channels far eclipses that in the cryptocurrency world. 

According to estimates by the International Coalition Against Illicit Economies, around $3 trillion to $5 trillion in fiat currency—up to 5% of the world's GDP—is laundered annually through conventional financial institutions. This dwarfs the $22.2 billion in illicit crypto transactions in 2023.

The perception that crypto is uniquely problematic overlooks the staggering scale of money laundering and other financial crimes occurring within established banking systems. If anything, cryptocurrency’s transparency—due to its inherent blockchain technology—makes it more traceable than traditional cash, which can disappear without a trace.

Transparency of blockchain

Unlike cash transactions, which are almost impossible to track once they change hands, cryptocurrencies operate on transparent, public ledgers called blockchains. Every transaction is recorded and can be traced back to its origin. 

This transparency provides law enforcement with an unprecedented tool for tracking criminal activity. Chainalysis and other blockchain analysis firms specialize in monitoring suspicious transactions and providing insights to regulators and law enforcement. 

In fact, this transparency has already helped authorities crack down on cybercriminals, leading to several high-profile arrests and the recovery of stolen funds.

This aspect of cryptocurrency often goes unmentioned in discussions about its use in crime. The truth is, criminals who use crypto are increasingly finding themselves at a disadvantage compared to those who rely on cash or traditional banking methods. 

The blockchain’s permanent record makes it easier for authorities to follow the money trail, leading to successful investigations and prosecutions.

While bad actors do use cryptocurrencies, they make up only a tiny fraction of overall activity. When compared to the scale of crime in the traditional financial system, crypto crime is minuscule. 

The narrative needs to shift to reflect the reality.

Author Bio

Nigel Green is deVere Group CEO and Founder