Shift in Criminal Payment Preferences
Chainalysis research reveals a significant change in how criminals handle their illicit funds. According to their latest findings, stablecoins have overtaken Bitcoin as the preferred digital currency for money laundering operations. The crypto analytics firm discovered that these fiat-pegged tokens were involved in nearly 63% of all money laundering transactions during 2024.
I think what’s happening here is that criminals are adapting to what works best for them. The report explains that stablecoins are mostly preferred because they’re relatively easy to send overseas. They can also be traded informally without the usual identity verification processes that traditional financial systems require. It seems stablecoins are becoming the new “back accounts” for criminal organizations.
How the Money Laundering Process Works
For those unfamiliar with the terminology, a “back account” serves as the final destination where funds transferred through multiple accounts are eventually withdrawn. The initial account where victims first deposit their money is called the “front account.” This layered approach makes tracking more difficult.
Until 2021, Bitcoin was almost exclusively used for various money laundering crimes. But things have changed recently. Stablecoins have become more difficult to trace, especially when moving across international borders. The growth in stablecoin adoption has unfortunately led to a corresponding increase in their illegal use.
This trend isn’t just something Chainalysis noticed. The Financial Action Task Force reported back in June that criminal use of stablecoins has increased significantly since last year. They also claimed that the majority of illicit activities on blockchains now involve stablecoins.
Global Criminal Patterns
The United Nations Office on Drugs and Crime published a report in January that identified Tether (USDT) as the most popular currency for criminal gangs operating in Southeast Asia. The main reason? Versatility. The UNODC noted the difficulty in smuggling traditional fiat currencies overseas, and converting them in countries like Korea presents even more challenges.
Chainalysis found that converting criminal proceeds into stablecoins allows for relatively easy cross-border remittance. Money launderers can bypass regulated exchanges by using overseas crypto platforms that don’t require KYC verification. They can also use over-the-counter transactions, which adds another layer of anonymity.
The Tracking Challenge
The report makes an interesting point about traceability. While stablecoins are fundamentally traceable on the blockchain, their decentralized nature allows them to avoid direct government control. Although transactions leave a digital trail, crypto wallets make tracking difficult because they use randomized alphanumeric characters. When stablecoins go through mixing or tumbling services, they become even more challenging to follow.
Korean criminals in particular are increasingly turning to stablecoins for what’s called “Oda Jangip fraud.” This scam typically begins with false advertising on online shopping stores or second-hand marketplaces, where unsuspecting buyers are tricked into sending money.
What’s concerning is that stablecoins are being used to launder proceeds from both small-scale frauds involving hundreds of thousands of dollars and large-scale operations moving hundreds of millions or more.
Legal Consequences and Sentencing Patterns
Perhaps the most troubling finding is that criminals involved in stablecoin-related crimes often receive surprisingly lenient sentences. Chainalysis provided an example of one criminal who laundered over $188 million while working for a voice phishing ring in January. This person, referred to as Person A, bought Ethereum and transferred it to an overseas crypto exchange.
The ETH was then swapped for USDT and transferred to a crypto wallet controlled by the criminal ring. The entire money laundering process involved domestic bank accounts, ETH, overseas crypto exchanges, stablecoins, and finally a crypto wallet. Despite the massive scale of the operation, the criminal received only one year and six months in prison, suspended for three years.
Another case involved a criminal sentenced to eight months in prison and two years’ probation for deceiving a victim who bought perfume through a second-hand marketplace. The criminal received the customer’s 220,000 won deposit through a fake bank account, then exchanged it for USDT to cash out.
Financial fraud organizations using stablecoins primarily employ tactics like voice phishing, stock and coin “leading room” scams, and second-hand market fraud. Their main objective is finding ways to launder the proceeds cleanly and eventually withdraw them as cash. It’s a system that seems to be working for them, at least for now.
