Chainalysis report: 99.6% of cryptocurrency transactions deemed legitimate

Leading blockchain analytics firm Chainalysis has recently published a report on cryptocurrency transactions, revealing a surprising fact that around 99.6 percent of cryptocurrency transactions serve legal purposes.

Chainalysis notes a significant drop in the total value of cryptocurrency sent to illicit addresses, from $39.6 billion in 2022 to $24.2 billion in 2023, suggesting progress in a more secure crypto ecosystem. It’s essential to consider that the 2022 figures were partly inflated by $8.7 billion in FTX creditor claims after the collapse of the Sam Bankman-Fried-led startup.

In 2023, illicit cryptocurrency transactions represented only 0.34 percent of all cryptocurrency volume, down from 0.42 percent in 2022 and a substantial decrease from 1.3 percent in 2019.

The report also provides insights into the evolving trends of cryptocurrency usage, dispelling concerns about the legitimacy of digital currencies. It scrutinizes crypto transactions and challenges the narrative from figures like JPMorgan Chase & Co. CEO Jamie Dimon, who expressed worries about cryptocurrencies facilitating illegal activities.

Crypto enthusiasts, including Edward Snowden, dismissed Jamie Dimon’s stance as overly dramatic, finding amusement in Dimon’s concerns on platform X.

However, it’s important to note that the Chainalysis data doesn’t include funds from non-crypto crimes, potential market manipulation, or money laundering in the cryptocurrency realm.

Still, cryptocurrency-related crime remains relatively small compared to illicit activities in the traditional financial sector. Nasdaq’s Global Financial Crime Report estimates over $3.1 trillion in illicit funds circulated globally in 2023, with significant contributions from drug trafficking ($782.9 billion), human trafficking ($346.7 billion), and terrorist financing ($11.5 billion).

Tether-related crimes rising

The report also highlights shifting trends in cryptocurrency usage for illicit purposes. Bitcoin, once favored by cybercriminals for its liquidity, has seen a consistent decline in illicit transactions over the past five years.

Meanwhile, stablecoins, particularly Tether, have emerged as key players in both legitimate and illicit crypto activities.

A recent report from the United Nations disclosed that Tether played a notable role in the surge of cryptocurrency-related crimes in Southeast Asia. Per the report, Tether is attractive to criminals due to its quick and irreversible transaction. This is especially exploited in illegal online gambling, a common method for cryptocurrency-based money laundering.

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