Cryptocurrency
is used by criminals to facilitate their illegal activities.
Law enforcement is using one of
cryptocurrency's strengths to combat cryptocrime. Cryptocurrency is an asset
for those seeking privacy in their transactions, including criminals. Eyebrows
went up when a couple were arrested for allegedly laundering billions in stolen
bitcoins.
Cryptocurrencies are now being used by
some criminal organizations, either directly through the organization's own
technical personnel or through contacts with criminal groups dedicated solely
to laundering money from other organizations. For example, the U.S. Department
of Justice (2018, p. 123) states, "In recent years, money laundering
through virtual currencies such as Bitcoin has become more prominent because it
allows transnational criminal organizations to transfer illicit proceeds
internationally and with more security than traditional cash transactions.
Once we have cryptocurrency of illegal
origin, there are various methods of laundering it and embedding it in the
traditional system, which we will discuss in this article. The characteristics
of cryptocurrencies, especially the elimination of intermediaries and the
privacy it provides, make it a very attractive and new product for these
organizations that use it as a means of payment in some illegal activities and
as a method to launder illicit proceeds. Payment for goods and services using
cryptocurrencies is becoming more common, as are ATMs that allow the exchange
of trust money for bitcoins and vice versa, in both cases making it easier for
criminal organizations to integrate "dirty money" into the legal
circuit. Similarly, with an agreement between two people, cryptocurrencies can
be exchanged directly, as well as the buying and selling of houses and
vehicles.
This is especially beneficial for
underdeveloped countries and peoples under government pressure. The utilitarian
structure of cryptocurrencies allows these people to invest and transact with
the global economy, which can enhance their own economy and quality of life. In
conclusion, it would be a mistake to assume that most cryptocurrency
transactions are of illegal origin or that authorities should ban the use or
development of these digital assets. In fact, this type of illegal use of
cryptocurrencies is probably in the minority. In this regard, it should be
noted that cryptocurrencies are the latest monetary phenomenon of the 21st
century, and their development brings enormous benefits to our economies. New
exchange possibilities between companies and people around the world with very
low transaction costs, a new way to protect our own assets in the face of
financial repression in various countries like Venezuela or Argentina, a
healthy competitive pressure on monetary authorities to provide purchasing
power to public currencies and not be tempted. For this reason, in our opinion,
lawmakers and law enforcement authorities of different countries should use all
possible means to prevent and prosecute money laundering through
cryptocurrencies, while trying not to interfere with the development of this
new technology.
Fraud is the dominant cryptocurrency
crime, followed by theft and ransom ware. As we already analyzed in the
introduction, the use of cryptocurrencies is not always legal, and despite the
seeming security that virtual currencies offer, we find the existence of their
fraudulent use. Legislation has had to adapt (Teichmann and Falker 2020; Podgor
2019).
Cryptocurrency offers a level of
privacy to its users that can help avoid regulation measures.
Moreover, as cryptocurrencies continue
to become mainstream and acceptance grows, these coins can be used to protect
the privacy of organizations and businesses. They allow businesses to transact
via smart contracts via blockchain, with all financial transactions between
them secure. The options for use are virtually endless.
An additional advantage of
cryptocurrency is its complete decentralization, which means that for citizens
living in countries with unstable currencies, cryptocurrency allows free trade
across borders with citizens of wealthier countries, creating a level of
economic equality. With cryptocurrency, transaction fees are low or nonexistent
- unlike, for example, fees for transferring money from a digital wallet to a
bank account. You can make transactions at any time of the day or night, and
there are no restrictions on buying or withdrawing funds. And everyone is free
to use cryptocurrency, unlike opening a bank account.
Blockchain technology and
cryptocurrency transactions are automated, digitized and tracked in a ledger
that can never be manipulated by people, companies or governments. This not
only gives people power and freedom, but also reduces the risk of fraud and
corruption. You can't cheat a system that can't be changed.
Cryptocurrencies serve as a financial
tool for many illegal and disreputable purposes, such as: In the future, there
will be a conflict between regulation and anonymity. Since several
cryptocurrencies have been linked to terrorist attacks, governments will want
to regulate cryptocurrencies. On the other hand, the main focus of
cryptocurrencies is to keep users anonymous.
Cryptocurrencies can be quickly and
easily transferred from one crypto-address to another, whether they are the
same person or completely different individuals, locals or foreigners,
acquaintances or strangers. They are easily transferred around the world,
allowing for international trade, which in a criminal environment means illicit
trafficking.
If you want to learn more about this topic, feel free to leave your valuable comments. We are happy to assist you.
All the best for your future.
(All the material in this article are only the views of
the author, and couldn’t be taken as “Financial Advice”)
Key Words: Use of Cryptocurrency in Criminal Activity
Use of Cryptocurrency in Criminal Accounts
Cryptocurrency Money Laundering Cases
Money Laundering
Fraud
Drug Trafficking
Human Trafficking
Child Exploitation
Dark Web
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