‘Stablecoins’ Facilitate $40 Billion in Crypto-Related Crime Since 2022

**Stablecoins Facilitate $40 Billion in Crypto Crime Since 2022**

A recent report from Chainalysis reveals that stablecoins, such as Tether pegged to the US dollar, played a significant role in the majority of cryptocurrency-based scam transactions and sanctions evasion in 2023.

Stablecoins, designed to offer stability compared to volatile cryptocurrencies, have gained popularity for their ease of use. However, as they became mainstream among legitimate users, a darker side emerged, with criminals exploiting them for scams and sanctions evasion.

Chainalysis' annual crime report highlights the disproportionate use of stablecoins in illicit transactions. According to the report, stablecoins were involved in 70% of crypto scam transactions in 2023, 83% of crypto payments to sanctioned countries like Iran and Russia, and 84% of crypto payments to sanctioned individuals and companies. These figures exceed the overall use of stablecoins, which constituted 59% of all cryptocurrency transaction volume in 2023.

The report uncovers $40 billion in illicit stablecoin transactions in 2022 and 2023 combined, with sanctions evasion being the largest category of stablecoin-enabled crime. Sanctions evasion accounted for over half of the $24.2 billion in criminal transactions observed by Chainalysis in 2023, with stablecoins dominating these transactions.

Stablecoins offer a means for sanctioned individuals and countries to circumvent restrictions on accessing stable currencies like the US dollar. Chainalysis suggests that individuals in jurisdictions under sanctions turn to stablecoins for their stability and accessibility.

The report cites examples like Nobitex, the largest cryptocurrency exchange in Iran, where stablecoin usage surpasses bitcoin by a 9:1 ratio, and Garantex, a sanctioned exchange in Russia, where stablecoin usage outpaces bitcoin by a 5:1 ratio.

Chainalysis acknowledges that its analysis excludes some privacy-focused cryptocurrencies like Monero and Zcash, designed to be harder to trace. However, the report emphasizes that stablecoins, particularly Tether, play a central role in illegal activities due to their stability, ease of use, anonymity, and low transaction fees.

Tether Holdings, the issuer of Tether, responded to the report by stating its commitment to collaborating with law enforcement to prevent illicit use of its cryptocurrency. The company argued that Tether's transparency and compliance standards, along with blockchain observability, contribute to identifying and freezing assets involved in criminal activities.

Despite Tether's efforts to freeze funds associated with crime, Chainalysis data suggests that illicit use of stablecoins far exceeds the funds seized. The report underscores the challenges in addressing stablecoin-enabled crime and emphasizes the need for more comprehensive solutions to stay ahead of bad actors.