The cryptocurrency ecosystem continues to evolve, becoming more mainstream and deeply integrated into global financial systems. However, this growth has also brought a surge in illicit activities. 

Cryptocurrency, once primarily linked to cybercrime, now facilitates a wide array of threats, including those tied to national security and consumer protection. The increasing diversity and professionalization of crypto-related crimes highlight a troubling trend that warrants close examination.‍

A Shift Toward Professionalization

Illicit actors have expanded their methods, using cryptocurrency not only for direct crimes but also to launder proceeds from traditional crimes. 

According to a Chainalysis report shared with the Byteline, this evolution has led to the rise of sophisticated, large-scale on-chain services that cater to various illicit actors. Platforms such as Huione Guarantee exemplify this trend, offering infrastructure for laundering stolen funds, selling scam technology, and facilitating other crimes.

 Since its inception in 2021, Huione has processed over $70 billion in crypto transactions, playing a pivotal role in activities such as fraud, sanctioned transactions, and gambling. This platform, among others, underscores the growing complexity and organization of crypto crime networks.‍

A Record Year for Illicit Activity?

Preliminary data for 2024 indicates that $40.9 billion in cryptocurrency flowed to illicit addresses, a decline from the updated 2023 total of $46.1 billion. However, these figures are expected to rise as more addresses are identified and attributed to illicit activities. Historical trends suggest that 2024’s final tally may exceed $51 billion, continuing a consistent growth trajectory averaging 25% annually since 2020.

While the absolute volume of illicit activity is projected to grow, the share of cryptocurrency transactions associated with crime fell to 0.14% in 2024, down from 0.61% in 2023. This reduction reflects both the expanding use of cryptocurrency for legitimate purposes and the proactive efforts of law enforcement and blockchain analytics firms.‍

Diversification of Crypto Crime

The diversification of crypto crime is evident across asset types and crime categories. Bitcoin (BTC), once the dominant currency for illicit activities, now accounts for a smaller share as stablecoins rise in prominence. 

Stablecoins, which provide liquidity and stability, have become the preferred medium for many illicit actors, particularly those in sanctioned jurisdictions. However, privacy coins like Monero remain popular in darknet markets and other high-risk sectors.

Criminal groups have also adopted diverse tactics, from ransomware attacks and scams to laundering services and transnational crime networks. North Korean hackers, for example, stole $1.34 billion in 2024, representing 61% of all stolen funds. These operations often involve sophisticated methods, including private key compromises and infiltration of crypto firms.‍

Key Crime Categories in 2024

Ransomware

Ransomware attacks persisted as a significant concern in 2024, with hundreds of millions of dollars in reported revenues. Although law enforcement efforts have disrupted several groups, some continue to operate, adapting their methods to evade detection.‍

Stolen Funds and Scams

Stolen funds increased by 21% year-over-year to $2.2 billion. High-yield investment scams and "pig butchering" schemes were among the most prolific, with fraudsters leveraging artificial intelligence (AI) to enhance their operations. AI-driven scams, including sextortion and identity fraud, have become increasingly personalized and difficult to detect.‍

Darknet Markets and Fraud Shops

Darknet market volumes declined to $2 billion in 2024, down from $2.3 billion in 2023. Fraud shop volumes dropped significantly, attributed to major law enforcement actions such as the takedown of the Universal Anonymous Payment System (UAPS).‍

Emerging Threats and Trends

The professionalization of the crypto crime ecosystem has blurred the lines between traditional and cybercrime. Transnational organized crime groups now use cryptocurrency for drug trafficking, gambling, intellectual property theft, and human trafficking. These activities often involve "polycrime," where networks engage in multiple crime types simultaneously.

The rise of laundering-as-a-service platforms, like those operated through Huione, has further enabled illicit actors. These platforms provide the tools and infrastructure needed to facilitate a broad spectrum of criminal activities, from scamming to sanctions evasion.‍

The Role of Law Enforcement and Analytics

Blockchain analytics firms, such as Chainalysis, have played a crucial role in identifying and disrupting illicit activity. New tools like the Signals data framework use heuristics and on-chain analysis to detect suspicious addresses, improving attribution rates over time. For example, Signals data has already enhanced estimates of illicit activity by identifying suspected transactions linked to high-risk actors.‍

The Road Ahead

Despite advances in tracking and combating crypto crime, the ecosystem remains a challenging frontier for law enforcement. As cryptocurrency adoption grows, so too will the sophistication and scale of illicit activities. To address these challenges, a combination of regulatory clarity, international cooperation, and technological innovation will be essential.