Use of Cryptocurrency in Criminal Activities



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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