Busting the myth of illegal money in crypto

The mainstream media continues to propagate the story that the crypto market is swimming in ‘dirty money’. However, those of us who work in crypto know that the opposite is true: it is traditional finance that actually performs the massive majority of money laundering, and there are figures to back that up.

According to Chainalysis’ 2022 Crypto Crime Report, transactions involving illicit addresses accounted for only 0.15% of total cryptocurrency volume in 2021, and some estimate it to be as low as 0.10%.

Yes, there have been illicit addresses in the past in crypto, but these are also dwindling. There has been a downtrend over the years to stand at 0.6% in 2020, a considerable drop from 3.4% in 2019. So why do the MSM stories persist? Because cryptocurrency’s growth and evolution has been primarily directed toward delivering mainstream use cases.

It’s also important to have the facts about the activities of bad actors using the traditional finance system, if only to be able to point this out to friends who claim the crypto market is full of criminals. Kathryn Haun, the founder of Haun Ventures and a former federal prosecutor, says that 99.9% of fiat-denominated money-laundering goes unprosecuted. She led investigations on corrupt agents involved in the Silk Road and the Mt Gox hack, saying, “I testified before the U.S. Senate about this…And I thought that can’t be right. But I researched it and indeed it’s true.” Basically, the conditions for money laundering in TradFi are so good that the people involved in it are unlikely to bother with using the crypto market.

Another TradFi example is that of Credit Suisse, which faced charges this year for facilitating money laundering on behalf of a Bulgarian cocaine trafficking gang — largely by stuffing euro bills into suitcases. And HSBC was fined £46m by the United Kingdom’s Financial Conduct Authority (FCA) in 2021 for failing to prevent money laundering operations between 2010 and 2018. This wasn’t the first time HSBC had been fined by a government for money laundering.

The stories linking cryptocurrency protocols to bad actors ignores all quantitative metrics which might be used to provide a more accurate picture of the crypto market for the general public. However, there is an agenda at play which works against this happening.

The authorities seek to regulate distributed virtual networks, and create a technocratic surveillance state powered by AI and social credit scores that extinguish individual privacy. As private citizens we are being increasingly scrutinized, tracked, quantified, and measured. The only protection from that is decentralized architecture and robust protections for privacy.