The crypto industry has been around for quite some time now, and it has gained a lot of notoriety already. The anonymity that the underlying blockchain technology provides makes cryptocurrencies a suitable payment method for illicit activities. This has resulted in the growing use of cryptocurrencies amongst criminals.
The bad reputation that crypto carries around is mostly boosted by the modern-day pop culture that often defines cryptocurrencies as a mere currency for criminal activities. As of now, “drug sales on the darknet” is a phrase that has become synonymous with “drug purchased with cryptocurrency.”
Crypto use is not just limited to narcotics, a recent Reuters article on February 14, states that cryptocurrencies are boosting illegal gambling, which has often driven match-fixing in the region has grown as gamblers use cryptocurrencies as a payment method.
Crypto boosting illegal gambling
As per the article, the Asian Football Confederation (AFC) has seen a decline in cases of match-fixing over the last six years, but gambling is steadily on the rise with crypto use. The AFC along with Swiss-based Sportradar has worked together to crack down on corruption within Asian Soccer since 2013.
Prior to this, the illicit gambling and match-fixing racket was run by large global syndicates, but the AFC’s clean-up efforts were strong enough to shut down these operations. However, according to Director of Intelligence & Investigation Services at Sportradar Oscar Brodkin, the operations are now run by ‘lone wolves’ and “Local gangs.”
With time, the betting amounts have also become larger, and the parties involved have also shifted to a more secure and anonymous means of payment utilizing cryptocurrencies. On this matter, Brodkin noted:
“We have observed an increase in adoption of cryptocurrency as a payment method for illegal activities and a medium to bet.”
Gambling Continues to be illegal across many of the major populated continents like mainland China, India, Indonesia, Pakistan, and Bangladesh, but the illegal operations still flourish under the radar. Transparency International estimated the illicit gambling market in Asia to be worth around $400 billion in 2018.
The situation is tense
There are several reports that actually suggest what the regulators are concerned about. A 2017 study by the University of Oxford showed that 44% of every Bitcoin transaction is linked to some kind of illegal activity. The report read:
“The estimated 24 million bitcoin market participants that use bitcoin primarily for illegal purposes (as at April 2017) annually conduct around 36 million transactions, with a value of around $72 billion, and collectively hold around $8 billion worth of bitcoin. “
Another report from the University of Sydney states that “around $76 billion of illegal activity per year involves bitcoin (46% of bitcoin transactions), which is close to the scale of the US and European markets for illegal drugs. “
However, a 2019 Chainalysis report suggests that the rate of Bitcoin used for illegal activities is down to 1% from 7% back in 2012. The 1% Bitcoin was used for dark web transactions. The report did mention that this number would have doubled by the end of 2019.
There is some criminal undergrowth within the crypto industry, but cryptocurrencies are just a mere tool for payments. The lack of regulations is far more concerning and is the area that should be tended to. What the policymakers can do is monitor and track illegal operations. This, in fact, is a lot easier while dealing with cryptocurrencies as every transaction is recorded on the blockchain.