The use of cryptocurrency for illicit activities has been a growing concern in the financial world, with recent data from blockchain forensic firm Chainalysis revealing some alarming trends. According to Chainalysis, nearly 30% of all crypto traced from illicit addresses since 2019 ended up at sanctioned services like Russia’s crypto exchange Garantex, amounting to nearly $100 billion in total.
The data highlights a significant lack of international cooperation on anti-money laundering measures, as illicit funds continue to flow through intermediary wallets and eventually end up at sanctioned services. What is particularly concerning is the increasing use of stablecoins for illicit transactions, with stablecoins accounting for the majority of all illicit transaction volume.
Stablecoins have become a popular tool for sanction evaders looking to bypass restrictions, with issuers like Tether having the ability to freeze funds in order to comply with regulations. This has led to sanctioned entities like Russia’s metal producers and Venezuela’s state-run oil company PDVSA turning to stablecoins like USDT for cross-border transactions in the face of tightening U.S. sanctions.
In response to these developments, Tether has publicly reiterated its commitment to adhere to the OFAC SDN list and has announced plans to promptly freeze any sanctioned addresses. The use of cryptocurrency for illicit activities continues to be a complex issue, with regulators and industry players working to address the challenges posed by bad actors in the crypto space.