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Cryptogambling / Stunning Report: $40 Billion in Illicit Deals via Stablecoins – Crypto’s Hidden Underworld Exposed!

Stunning Report: $40 Billion in Illicit Deals via Stablecoins – Crypto’s Hidden Underworld Exposed!

Publish Date: 19/01/2024

In a groundbreaking analysis by the cryptocurrency analytics firm Chainalysis, a startling revelation has surfaced: stablecoins, known for their alignment with stable assets like the US dollar, have become the cornerstone in a significant portion of illicit cryptocurrency dealings. These findings are reshaping our understanding of stablecoin’s role in the digital finance world.

Stablecoins, by design, offer the borderless ease of Bitcoin without the volatility, a feature that has skyrocketed their transaction volumes, surpassing even Bitcoin in recent times. Yet, alongside their mainstream adoption, an unsettling trend has emerged. These coins are increasingly being utilized for illegal activities, including massive-scale international sanctions evasion and various financial scams.

Chainalysis’s annual crime report sheds light on the disturbing trend: a staggering 70% of crypto scam transactions in 2023 involved stablecoins. The figures are even more alarming when considering transactions related to sanctioned countries like Iran and Russia, where stablecoins accounted for 83% of crypto payments, and 84% for payments to specifically sanctioned entities.

The total illicit transactions involving stablecoins amounted to a jaw-dropping $40 billion over 2022 and 2023, with sanctions evasion being the largest category. This trend highlights a severe challenge to international efforts to enforce sanctions and combat financial crimes.

Experts like Andrew Fierman, head of sanctions strategy at Chainalysis, highlight the inherent appeal of stablecoins. These digital currencies offer the stability of hard currencies like the US dollar, which is particularly attractive in sanctioned jurisdictions lacking access to such stable currencies. This has led to their rampant use on platforms like Nobitex in Iran and Garantex in Russia, significantly outpacing Bitcoin transactions.

Chainalysis’s analysis, while comprehensive, acknowledges limitations in tracking more private cryptocurrencies like Monero and Zcash. These currencies are designed to evade traditional blockchain analysis, making the tracking of illicit transactions more complex.

Recent United Nations research also underscores the predominant role of stablecoins in unlawful operations across Asia, particularly emphasizing Tether’s use in illegal gambling and cyberfraud. The preference for Tether, especially via the TRON blockchain, is attributed to its stability, anonymity, and low transaction fees.

Erin West, a deputy district attorney in California, points out the alarming trend of stablecoin use in sanctions evasion, undermining the very essence of international law enforcement mechanisms. The surge in stablecoin use in criminal activities, according to West, presents a serious threat to global financial security.

In response to these findings, Tether Holdings, the issuer of the widely-used stablecoin Tether, emphasizes its commitment to compliance and collaboration with law enforcement to prevent misuse. The company highlights its ability to freeze funds linked to illegal activities, citing over $835 million in frozen funds since 2014. Tether Holdings stresses its dedication to transparency and adherence to legal standards in combating financial crimes.

This revelation about stablecoins marks a critical juncture in the cryptocurrency sphere, prompting a reevaluation of the role and regulation of these digital assets in the global financial system.

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