Sustainably Investing in Digital Assets Globally

Chapter 10Illicit Use of Cryptocurrencies

First flagged by the US Federal Bureau of Investigations (FBI) in an April 2012 report that analyzed the likelihood and consequences of illegal activities involving Bitcoins, there is a dark side to Bitcoins, as they have become essential for criminal and fraudulent activity in evading the scrutiny of world law enforcement and agencies. Individuals involved in illicit activities constantly seek to exploit new ways to launder proceeds of terror financing, drug and weapons dealing, tax evasion, bribery, corruption, hacking theft ransomware, and intellectual property espionage. One of the “advantages” of Bitcoins touted by their supporters for use in illegal transactions is their independence from any government or regulation so that illicit payments made using Bitcoin go undetected and remain hidden in the deep dark web. This taints cryptocurrency's reputation.

The enactment of FinCEN's Bitcoin regulations, which imposed registration requirements on money services businesses (MSBs) in 2013, allowed US law enforcement and agencies to use the long arm of the law to work collaboratively with global law enforcement and agencies and with private technology companies in multijurisdictional investigations to shed light on criminals who laundered cryptocurrencies by using them in illicit transactions on cryptocurrency exchanges, wallets, and darkweb markets.¹

In 2020, US agencies sought millions of dollars in new funding to bolster national and ...