If you’ve been anywhere near cryptocurrencies. You know their rise has already crescendoed, and we’re in the diminuendo section of the crypto story. However, prices hit record highs during the rise’s peak, but not everything was as rosy as it might seem. Criminal activity and the use of crypto for illicit purposes were also on the rise, and many experienced its negative effects.
Activities like money laundering, fraud, cybercrimes, and drug dealing have also, for lack of a better word, benefited from the rise of crypto. This has also emboldened many, and criminals alike, to get into illicit crypto schemes, with an estimated $10 billion worth of illegal crypto transitions made in 2020.
This article will look at the illegal use of crypto and try and figure out if this is a problem we can put a cap on. So if you’re ready to get your Sherlock Holmes on, keep reading to learn more.
How are Cryptocurrencies Used for Illicit Activities?
I. Drug Trafficking
We don’t know if you know this, but the postal service is the most preferred way of delivering drugs for most drug dealers. It sounds crazy when you first hear it, but it’s pretty ingenious when you hear its reasoning. Because of the high level of packages being shipped through the postal service and today’s people’s expectations to get their shipments fast. It makes it impossible to check all the packages’ contents. In fact, only a tiny portion of all shipped items actually get inspected.
This makes the postal service quite a safe method for drug dealers to get their products to their customers’ doorsteps. Crypto’s role in this is that it provides an anonymous payment method that obscures the dealers’ identity from authorities and makes tracking almost impossible. Furthermore, Ethereum’s use in such illegal activities has increased and even overtaken Bitcoin.
II. Fraud/ Scams
Unfortunately, there is no shortage of scams and fraudulent dealings when it comes to crypto. But for this piece’s purpose, we will highlight fake cryptocurrencies. And in proper crypto form, these scams also present themselves in a few different ways.
The first is when there is a fake announcement of a new currency that gets hyped by celebrities and social media influencers. Then people quickly buy into the crypto in the hope of making a profit when it rises in value, only for the operators to close shop or announce bankruptcy.
The other is when a fake cryptocurrency registers a domain name almost similar to a popular currency, intending to take advantage of unkeen buyers. The operators also make their marketing materials resemble the coin they are emulating to be more convincing. However, once people take note, they close shop and probably immerge as another crypto look-a-like, ready to scam the next butch.
It is a Big Challenge to Chase Those Criminals
Unfortunately, tracking and capturing criminals involved in crypto scams can be challenging. This is because most crypto transactions are anonymous and don’t require KYC protocols as other payment methods. Account holders also don’t go through background checks, nor do they have to use their real identities to create them.
As such, it allows them to have multiple accounts, increasing their chances of success with their scams and lowering their chances of being caught. Furthermore, there is not enough legal framework to help authorities deal with cryptocurrencies. This is partly because local jurisdictions have not yet fully comprehended these crimes, and the industry is international, throwing another curve ball to the whole process.
Could this problem be solved?
The definitive answer to this question is yes. We can solve anything with time and the right resources dedicated to a cause, and illicit use of crypto is no different.
For instance, if a proper audit report was to be done on the criminal activity on Ethereum, authorities could begin to understand the inner workings of the industries. Ethereum appears in many different blockchain areas, news and activities, for example, the Ethereum merge event or in Ethereum Code. Therefore, understanding one will also give insights into other currencies based on the same.
However, before the bureaucratic wheel can turn, you need to know how to protect yourself from such scams. Fortunately, the answer is pretty simple. Don’t get registered on platforms you don’t trust or understand, even if your favourite celebrity tells you to. Always use trustable wallets to store your coins and keep your password to yourself. Finally, only participate in crypto activities you’re sure of and understand.
