Over the last five years, cryptocurrencies like Bitcoin, Ethereum, and Ripple have gained significant attention due to their potential for facilitating illegal activities. However, a closer examination of the data reveals that the United States Dollar (USD) has been used in more online and offline crime than any cryptocurrency during this period. This article will explore the reasons behind this trend, the types of crimes committed using USD and cryptocurrencies, and the implications for law enforcement and policymakers.
Why is the USD More Prevalent in Crime than Cryptocurrency?
There are several reasons why the USD is more commonly used in criminal activities compared to cryptocurrencies:
- Accessibility and familiarity: The USD is the world’s primary reserve currency and is widely accepted in international transactions. This makes it easier for criminals to use the currency for illicit purposes. In contrast, cryptocurrencies are still relatively new and not as widely understood or accepted.
- Anonymity: While cryptocurrencies are often touted for their anonymity, the USD can also provide a high level of anonymity, particularly when used in cash transactions. This makes it an attractive option for criminals looking to avoid detection.
- Stability: The value of the USD is relatively stable compared to cryptocurrencies, which can experience significant price fluctuations. This makes the USD a more reliable store of value for criminals.
Types of Crimes Committed Using USD and Cryptocurrencies
Both the USD and cryptocurrencies have been used to facilitate a wide range of criminal activities, including:
- Money laundering: Criminals use various methods to launder money, including cash smuggling, trade-based money laundering, and shell companies. The USD is often the currency of choice for these activities due to its widespread acceptance and stability. Cryptocurrencies have also been used for money laundering, particularly through the use of “mixers” or “tumblers” that obscure the origin of funds.
- Drug trafficking: The USD has long been associated with drug trafficking, as cash transactions are difficult to trace and can be easily transported across borders. Cryptocurrencies have also been used in drug trafficking, particularly on darknet marketplaces like Silk Road and AlphaBay, where users can purchase illegal drugs using Bitcoin and other digital currencies.
- Ransomware attacks: Ransomware attacks involve encrypting a victim’s data and demanding payment in exchange for the decryption key. While cryptocurrencies like Bitcoin have become the preferred method of payment for ransomware attackers due to their perceived anonymity, there have also been cases where attackers have demanded payment in USD.
- Human trafficking: Both the USD and cryptocurrencies have been used to facilitate human trafficking, with criminals using these currencies to pay for transportation, forged documents, and other expenses related to the illegal movement of people.
Case Studies and Statistics
Several high-profile cases and studies highlight the prevalence of the USD in criminal activities compared to cryptocurrencies:
- In 2018, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) reported that the USD was used in 91.5% of all suspicious activity reports (SARs) filed by banks and other financial institutions, while cryptocurrencies were involved in just 0.9% of SARs.
- A 2020 study by the blockchain analytics firm Chainalysis found that while cryptocurrency-related crime increased between 2018 and 2019, it still represented less than 1% of all cryptocurrency transactions. In contrast, the United Nations Office on Drugs and Crime estimates that between 2% and 5% of global GDP is laundered through traditional financial systems, primarily using the USD.
- In 2019, the U.S. Department of Justice charged 60 individuals in connection with a massive healthcare fraud scheme that involved over $3 billion in false billings. The criminals used the USD to facilitate their illegal activities, including bribing doctors and pharmacists, and laundering the proceeds of their crimes.
Implications for Law Enforcement and Policymakers
The prevalence of the USD in criminal activities has significant implications for law enforcement and policymakers:
- Focus on traditional financial systems: While it is essential to address the potential risks posed by cryptocurrencies, law enforcement and policymakers must not lose sight of the fact that the vast majority of criminal activities are still facilitated through traditional financial systems using the USD. Efforts to combat money laundering, drug trafficking, and other crimes must continue to target these systems.
- International cooperation: Given the global nature of many criminal activities involving the USD, international cooperation is crucial in combating these crimes. This includes sharing information and intelligence, as well as coordinating efforts to disrupt criminal networks and seize illicit funds.
- Regulation of cryptocurrencies: While cryptocurrencies currently represent a small proportion of criminal activities, their use in crime is likely to increase as they become more widely accepted and understood. Policymakers must strike a balance between fostering innovation in the cryptocurrency space and implementing regulations that prevent their use in illegal activities.
Over the last five years, the United States Dollar has been used in more online and offline crime than any cryptocurrency. This trend is driven by factors such as the widespread acceptance and familiarity of the USD, its potential for anonymity, and its relative stability compared to cryptocurrencies. While it is essential to address the risks posed by cryptocurrencies, law enforcement and policymakers must not lose sight of the fact that the vast majority of criminal activities are still facilitated through traditional financial systems using the USD. By focusing on these systems and fostering international cooperation, we can make significant strides in combating crime and protecting our communities.