6 Signs Crypto Isn't Suitable for Crime – CryptoMode

6 Signs Crypto Isn't Suitable for Crime – CryptoMode

Cryptocurrency is often considered a haven for illicit activities due to its anonymity. However, it’s less suitable for large-scale crime than traditional payment methods. Here’s why.

Decline in Crypto Scam Revenue

In 2023, crypto scam revenue plummeted by 77% compared to the previous year. This sharp decrease is notable even as cryptocurrency prices have risen, bucking the trend where positive price movements usually correlate with higher scam revenue. 

The sudden disappearance of large-scale scams like VidiLook and Chia Tai Tianqing Pharmaceutical Financial Management significantly contributed to this dip. Typically, such scams lure victims with promises of high returns on their crypto investments. However, the abrupt exit of these scams, with no immediate replacements filling the gap, has marked a significant reduction in overall scam revenues​​​​​​.

Impersonation Scams Still Persist

Despite the decline in scam revenues, impersonation scams have seen less of a decrease. Individual transfers to such scam addresses increased by 49% in 2023. That indicates that more people are falling for these scams, albeit for smaller amounts​​​​. 

The vast majority of these scams require gift cards or traditional bank transfers. The lack of anonymity in crypto makes it far less suitable for these tactics. 

Rise in Ransomware Payments

Contrary to the decline in other forms of crypto crime, ransomware attacks have surged. In 2023, ransomware attackers are on pace for their second-biggest year. They have already extorted at least $449.1 million in the year’s first half. However, ransomware attackers can also ask for gift cards as payment, as those are anonymous. 

This form of cybercrime targets large organizations and smaller entities, with attackers increasing the size of ransom demands to maximize their gains. The increase in ransomware payments suggests that cybercriminals adapt their strategies. It makes this crime more prevalent and profitable​​​​​​.

Cryptocurrency Crime Traceability

A common misconception about cryptocurrencies is their anonymity. In reality, most cryptocurrencies provide pseudonymity rather than true anonymity. Transactions on the blockchain are traceable, which poses a risk for criminals. 

Law enforcement agencies are increasingly adept at tracking and tracing crypto transactions, making it harder for criminals to launder money or hide the proceeds of crime without detection.

The Role of Mixers and Regulations

Mixers, services that aim to obfuscate the source of cryptocurrencies, have been used by criminals to launder money. 

However, regulatory actions against mixers, like the crackdown on Tornado Cash, demonstrate the increasing effectiveness of law enforcement in tackling such tools used for illicit purposes.

Comparison with Traditional Finance

Traditional payment methods still offer more anonymity than cryptocurrencies. The blockchain’s inherent transparency allows for a level of traceability that is not possible with cash transactions. 

This makes cryptocurrencies less appealing for large-scale criminal operations, which often prioritize anonymity and untraceability.

Final Notes

Cryptocurrencies provide advantages for criminal activities, such as cross-border transactions and decentralized control. However, their traceability and the increasing effectiveness of law enforcement in tracking crypto transactions make them less suitable for large-scale crime than traditional payment methods.

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