The Shift from Bitcoin to Stablecoins
Chainalysis research reveals a significant change in how criminals handle money laundering operations. Stablecoins have become the preferred choice over Bitcoin, accounting for nearly 63% of all money laundering transactions in 2024. This shift marks a departure from previous years when Bitcoin dominated these activities.
I think what’s interesting here is how quickly this transition happened. Until 2021, Bitcoin was almost exclusively used for money laundering crimes. Now stablecoins have taken over that role, becoming what the report calls the new “back accounts” for criminal organizations.
Why Criminals Prefer Stablecoins
The appeal of stablecoins for illegal activities seems to come down to a few key factors. They’re easy to send overseas, can be traded without identity verification, and their value remains relatively stable compared to more volatile cryptocurrencies. This makes them more predictable for criminal operations.
What struck me was the versatility aspect. The United Nations Office on Drugs and Crime noted that Tether (USDT) has become particularly popular among criminal gangs in Southeast Asia. Converting fiat currencies overseas can be difficult, but stablecoins bypass many of those challenges.
How the Laundering Process Works
The money laundering process typically starts with what they call “front accounts” – where victims initially deposit money. Then it moves through various accounts until reaching the “back account” where funds are finally withdrawn. Stablecoins fit neatly into this system because they allow for easy cross-border remittance.
Criminals can bypass traditional exchanges by using overseas crypto platforms that don’t require KYC verification. Over-the-counter transactions also play a role here. While stablecoins are technically traceable, their decentralized nature makes government control difficult. The randomized alphanumeric characters used in crypto wallets add another layer of complexity for tracking.
Real-World Examples and Legal Consequences
The report provides some concerning examples of how this plays out in practice. Korean criminals are increasingly using stablecoins for “Oda Jangip fraud” – scams that begin with false advertising on online shopping platforms or second-hand marketplaces.
One case involved a criminal who laundered over $188 million while working for a voice phishing ring. The process began with domestic bank accounts, moved to Ethereum, then to overseas crypto exchanges, converted to USDT, and finally to a crypto wallet controlled by the criminal organization. Yet this person received only one year and six months in prison, suspended for three years.
Another case involved deceiving someone who bought perfume through a second-hand marketplace. The criminal received the customer’s 220,000 won deposit through a fake bank account, exchanged it for USDT, and cashed out. The sentence? Eight months in prison and two years’ probation.
These lenient sentences might be encouraging more criminals to use stablecoins for financial fraud. The main tactics include voice phishing, stock and coin “leading room” scams, and second-hand market fraud. Once they have the proceeds, they focus on laundering them cleanly and converting them to cash.
Perhaps what’s most concerning is how this trend seems to be growing alongside the general expansion of stablecoins in legitimate markets. As stablecoins become more mainstream, their use in illegal activities appears to be increasing proportionally. This creates a challenging situation for regulators and law enforcement agencies trying to balance innovation with crime prevention.
