Illicit crypto transactions exceeded $51 billion in 2024, significantly higher than previous estimates due to underreporting

The findings, published in the company's latest Crypto Crime Report, indicate a surge in AI-driven fraud, stablecoin laundering, and sophisticated cybercrime networks.

Illicit cryptocurrency transactions reached a record high of over $51 billion in 2024, according to blockchain analytics firm Chainalysis.

The findings, published in the company’s latest Crypto Crime Report, also highlight a significant surge in AI-driven fraud, stablecoin laundering, and sophisticated cybercrime networks.

Despite initial projections suggesting a decline in crypto-related crime, deeper analysis revealed that criminals have rapidly adapted to regulatory scrutiny.

This has led to a shift away from Bitcoin (BTC) in favor of stablecoins and privacy-focused assets, while cybercriminals are now integrating AI in new and sophisticated ways to perpetrate large-scale scams.

Criminals prefer stablecoins

Once the dominant currency in illicit transactions, Bitcoin is now seeing a smaller share of crypto crime.

Chainalysis reported that stablecoins were involved in 63% of illicit crypto transactions last year, the third year in a row they have surpassed Bitcoin.

Unlike Bitcoin, which has relatively slower confirmation times and high volatility, stablecoins offer nearly instant transactions with minimal price fluctuations.

This has made them a preferred tool for laundering large sums through cross-chain bridges, mixers, and decentralized platforms, allowing criminals to rapidly shift funds and evade detection.

Major stablecoin issuers, such as Tether, have been attempting to crackdown on illicit activity by freezing wallets linked to cybercrime.

However, criminals have quickly adapted, turning to alternative stablecoins, privacy-focused cryptocurrencies like Monero, self-custodial wallets, and DeFi-based laundering schemes.

As institutions and governments become more involved in the crypto sphere, the potential for large-scale fraud is also increasing.

In a recent case, crypto firm CLS Global pleaded guilty to charges of engaging in a huge wash trading scheme with a new token that the FBI had created as part of a sting operation.

The goal was to induce Chinese investors into fraudulent investment schemes.

The stign operation, codenamed "Operation Outfollw," spanned three years and involved the creation of a fictitious crypto firm named "Apex," complete with a website, office space, and a small workforce.

Its aim was to deceive Chinese investors with promises of high returns from investing in a new token called "ApexCoin," which would be used for payments at a chain of U.S. restaurants.

However, Apex was a facade, and the token was a figment of the FBI's imagination, designed to lure unsuspecting victims.

The narrative fabricators at the agency went to great lengths to craft a believable backstory for Apex, complete with a history of involvement in the cryptocurrency industry and a vision for the future of digital finance.

They even fabricated a tale of how Apex had been developing its own blockchain technology since 2015 and had already launched several successful tokens.

To further enhance the scam, the FBI enlisted the assistance of a cryptocurrency exchange, which created a dedicated trading pair for ApexCoin and executed trades to manipulate the token's price and volume.

The goal was to create the illusion of substantial trading activity and investor interest in the token.

In 2021, the FBI reached out to CLS Global, a small crypto firm run by cryptocurrency enthusiast Charles Lee, to participate in the final stage of the sting operation.

The FBI agents approached Lee with a proposition: they needed a crypto company to process funds on behalf of a Chinese client who was investing in Apex.

For its role, CLS Global would receive a 0.3% cut of the investment.

The total investment was $40 million, which meant that CLS Global stood to receive $120,000.

Despite being warned by his own lawyer that the email correspondence with the FBI could be used against him, Lee agreed to cooperate.

On March 10, 2023, in a Boston court, crypto firm CLS Global pleaded guilty to a single count of conspiracy to commit wire fraud in connection with a large-scale cryptocurrency fraud.

The goal was to defraud Chinese investors.

The company also agreed to pay $294,344 in restitution to the victims of the fraud.

The case is still ongoing, and it remains to be seen what penalties will be imposed on those involved.

However, the case serves as a stark warning about the growing threat of cryptocurrency fraud and the lengths to which fraudsters will go to deceive their victims.

It is also a reminder of the importance of being aware of the common types of cryptocurrency fraud and taking steps to protect oneself from becoming a victim.

Some of the most common types of cryptocurrency fraud include:

* Phishing scams

* Romance scams

* Investment scams

* Airdrop scams

* Email scams

* Counterfeit cryptocurrency

* Cryptocurrency exchange scams

* Cryptocurrency mining scams

If you think you may be a victim of cryptocurrency fraud, it is important to report it to the relevant authorities.

You can also contact the cryptocurrency exchange or platform where the fraud