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Fewer cybercriminals are turning to bitcoin as their primary method of moving illicit funds, with attackers preferring to return to fiat channels or opt for other cryptocurrencies, according to a new study.
According to the “Illicit Cryptocurrency Ecosystem Report” published on June 28, digital asset compliance and risk management company TRM Labs reported that illicit funding using Bitcoin (BTC) has significantly decreased over the past seven years.
Instead, TRM Labs said that the new era of multi-chains has led to a “quantum leap” away from Bitcoin as the primary means of moving criminal proceeds. The firm also stressed that cash and other forms of fiat-related financing remain the “default” means of criminal money movement.
“Indeed, cash and even older forms of financing such as hawala (transferring money without physically moving it) remain the main means of financing illegal activities and money laundering.”
TRM Labs also noted that while illegal activity using cryptocurrencies has increased, “cryptocurrency did not invent these criminal forms.”
The firm said that about $2 billion in crypto was stolen in 2022 bridge attacks, but very few of that was Bitcoin.
“The era of multichains has had a strong impact on the distribution of illicit cryptocurrency volume in general,” it noted, adding that Bitcoin’s share of illicit transactions has plummeted from 97% in 2016 to just 19% in 2022.
Also, while two-thirds of the volume of cryptocurrency hacks was in Bitcoin in 2016, by 2022 that figure had fallen to just under 3%.
Meanwhile, Bitcoin was also once the “exceptional currency” for terrorist financing, but by 2022 it was “nearly replaced” by Tron at 92%, TRM Labs claims.
In addition, TRM Labs claims that Tether (USDT) usage among terrorist financing organizations increased by 240% in 2022.
The latest data on illicit finance in crypto may be more welcome news for Bitcoin, which in recent days seems to be back on the table for institutional adoption.
However, according to TRM Labs, at least $7.8 billion has been invested in cryptocurrencies in Ponzi and pyramid schemes, at least $1.5 billion has been spent on drug-focused darknet markets, and $3.7 billion has been stolen via DeFi hacks and exploits in 2022.
On the subject: North Korea and criminals use DeFi services to launder money
Earlier this year, it was reported that 2022 set a new record for illegal cryptocurrency transactions. According to Chainalysis, the total value of cryptocurrencies obtained by illegal addresses exceeded $20 billion last year.