According to new research, fewer cybercriminals are turning to Bitcoin as their primary method of moving illicit funds, with bad actors opting to go back to fiat channels or choosing other cryptocurrencies.
Digital asset compliance and risk management firm TRM Labs revealed that illicit finance volumes involving Bitcoin (BTC) had fallen significantly over the past seven years, according to its “Illicit Crypto Ecosystem Report,” released on June 28.
TRM Labs said instead a new multichain era has led to a “qualitative leap” away from Bitcoin as a primary means of moving criminal proceeds. The firm also highlighted that cash and other forms of fiat-related finance remain the “default” means of criminal money movements.
“Indeed, cash and even older forms of finance such as hawala (transferring money without physically moving it) remain the default means by which illicit activity is financed and its proceeds are laundered.”
TRM Labs also noted that while illicit activity involving crypto has increased, “crypto did not invent these criminal forms.”
The firm reported that around $2 billion in crypto was stolen through attacks on cross-chain bridges in 2022, but very little of that was Bitcoin.
“The multi-chain era has had a sweeping impact on the distribution of illicit crypto volume as a whole,” it noted, adding that Bitcoin’s share of illicit transactions plummeted from 97% in 2016 to just 19% in 2022.
Furthermore, while two-thirds of the crypto hack volume was in Bitcoin back in 2016, that had fallen to just under 3% by 2022. The slack was taken up by Ethereum (68%) and BNB Smart Chain (19%), it said.
Meanwhile, Bitcoin was also once the “exclusive currency” for terrorist financing back then as well, but by 2022 it had been “all but replaced” by Tron, with 92%, TRM Labs claims.
Additionally, TRM Labs claims that there has been a 240% increase in the use of Tether (USDT) among the terror financing entities that it tracked in 2022.
The latest illicit finance figures in crypto may be brighter news for Bitcoin, which in recent days looks to be back on the table for institutional adoption.
However, the cryptocurrency saw at least $7.8 billion paid into Ponzi and pyramid schemes, as much as $1.5 billion was spent on darknet markets specializing in narcotics, and $3.7 billion was stolen through DeFi hacks and exploits in 2022, according to TRM Labs.
Related: North Korea and criminals are using DeFi services for money laundering
Earlier this year, Cointelegraph reported that 2022 set a new record for illicit crypto transactions. The total cryptocurrency value received by illicit addresses topped $20 billion last year, according to analytics firm Chainalysis.
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