TRON Surges as Crypto Hotbed for Illicit Activity, Dominating Bitcoin and Ethereum

In 2023, TRON held a 45% share of illicit crypto activity volume, surpassing leading networks like Ethereum (24%) and Bitcoin (18%). TRON's popularity among illicit actors, particularly North Korean hackers, stems from its low gas fees and perceived transaction anonymity. The TRM Labs report also highlights the dominance of Tether's USDT stablecoin in financing terrorism, with hackers using TRON to exchange stolen funds and convert them to fiat currency through OTC transactions.

TRON Emerges as the Crypto Hub for Illicit Activities, Outpacing Bitcoin and Ethereum

In a comprehensive report from TRM Labs, the TRON network has garnered the dubious distinction of facilitating a staggering 45% of the cryptocurrency space's illicit activities in 2023, a significant increase from its 41% share the previous year. This dominance overshadows other major networks like Ethereum (24%) and Bitcoin (18%).

The TRON network, under the stewardship of businessman Justin Sun, has become a haven for hackers, particularly those with ties to North Korea, who exploit the network to launder stolen funds, primarily in USDT stablecoins. These funds are subsequently converted into fiat currency via high-volume over-the-counter (OTC) transactions.

The TRM Labs report, titled "The Illicit Crypto Economy," underscores the alarming prevalence of terrorism financing using Tether Inc.'s USDT stablecoin, accounting for more than $19 billion in illicit funds. In contrast, USD Coin (USDC) has recorded a significantly lower illicit volume of just $428.9 million.

While some categories of cryptocurrency-related illicit finance have witnessed a decline, darknet drug sales have exhibited a worrying upward trend, rising from $1.3 billion in 2022 to $1.6 billion in 2023. Notably, the TRON network has experienced a more than fourfold increase in the volume of drug sales during this period.

Cybercriminals favor the TRON blockchain due to its low gas fees, price stability, and a perception that transactions are more challenging to trace, although experts argue that this notion is becoming increasingly outdated.

The report acknowledges encouraging news, with illicit activities in the cryptocurrency space showing a 9% decrease in 2023, resulting in a decline in total illicit funds to nearly $35 billion. Fraud and scams remain prevalent, but their share of illicit funds has diminished over the year.

This decline is largely attributed to increased pressure from governments and law enforcement agencies. The report highlights the US's significant efforts, resulting in a threefold increase in the number of crypto crime-related entities and individuals subject to sanctions.

Interestingly, the report notes that while Bitcoin remains the largest cryptocurrency by market capitalization, its share of illicit activities has steadily decreased in recent years. This trend underscores the growing utilization of alternative cryptocurrencies for illicit purposes, such as TRON and privacy-focused coins.

The report concludes by emphasizing the need for continued vigilance and collaboration between law enforcement agencies, regulators, and cryptocurrency exchanges to combat illicit activities in the digital asset space.