TRM Labs Reports $35 Billion Illicit Funds in Crypto Ecosystem

Blockchain analyst firm TRM Labs’s recent report revealed that the crypto ecosystem witnessed a 9% decline in illicit funds in 2023. The report attributes half of the illicit crypto volume to the TRON blockchain.

TRM Labs indicated a notable stride in the fight against facilitating illicit funds movement in the crypto ecosystem. The efforts realized notable gains, recording 9% fewer transactions than the 2022 crypto volume.

Since its unveiling, the blockchain intelligence firm has actively investigated money laundering and crypto-related fraud. The San Francisco startup leverages the input from Esteban Castano, its chief executive, in tracking criminals who leverage blockchain for illicit finance.  

TRM Labs revealed that the 9% shrink in illicit finance in the crypto ecosystem offers little reprieve as criminality rose in other forms. In particular, illegal drugs sold on the darknet marketplaces rose from $1.3 billion in 2022 to $1.6 billion last year.

Criminals Received Nearly $35 Billion in Crypto

The investigation conducted by TRM Labs illustrated that the illicit activity, though reduced by 9% in 2023, criminals still managed to execute crypto-based transactions worth nearly $35 billion.

The report titled ‘Illicit Crypto Economy’ featured in the Wednesday, March 27 publication revealed that scams and frauds account for the largest share in crimes orchestrated within the crypto ecosystem last year. The report illustrates that a third of the crypto crimes comprised frauds and scams.

The TRM Labs report captured substantially higher than the crypto industry estimates. Nonetheless, the illicit funds declined last year.

Regulatory Pressure Responsible for Drop in Crypto Hack Volumes

TRM Labs attributed the decline in illicit finance to regulatory pressure that led to a drop in the volume of hacked and sanctions-exposed funds. The report illustrates that the US tripled the individuals and entities sanctions owing to their links to crypto crime.

TRM Labs demonstrated that the North Korean hackers realized 30% less of the crypto volume they managed in 2022. The hack proceeds declined by nearly half, from $3.7 billion in 2022 to $1.8 billion.

The Wednesday report illustrated that the fentanyl and precursor materials sales using crypto declined by 150% last year. Nonetheless, the vendor sales rose 97% year-on-year to $33 million from $16 million in 2022.

TRM Labs’ investigation led to the discovery of a rising preference for darknet marketplaces to execute illicit drug sales. The report illustrates that illicit drug sales leapt from $1.3 billion in 2022 to $1.6 billion last year.  

TRON Blockchain and USDT Dominance Evident in Illicit Finance

The TRON blockchain emerged as the preferred channel for illicit finance, handling nearly half of the crypto-based crime. TRM Labs reported 45% of the illicit crypto volume, up from 41% in 2022.

Stablecoin Tether (USDT) accounted for the lion’s share of the illegal volume for its involvement in $19.3 billion of the crypto volume. It triumphed over Ethereum and Bitcoin, which were involved in 24% and 18%, respectively.

TRM Labs discovered shockingly that the unique TRON addresses involved in terrorism financing in receiving Tether (USDT) rose by 125% last year.

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