Furthermore, Southeast Asia has emerged as a nexus for organized cybercrime syndicates. A recent UN report has documented how these groups are turning more and more to stablecoins. Digital currencies are intended to have a stable value against fiat assets such as the US dollar. Instead, they’re becoming the governing paradigm for illicit transactions and fuelling fears of their potential worldwide use in fraud and money laundering. MetaBlock X is here to sift through this daunting and convoluted topic and empower you with advice you can use to keep yourself safe.

The Rise of Stablecoins in Cybercrime

Why Stablecoins?

Since 2022, a dramatic change has taken place in the digital underworld. For one, stablecoins have now dethroned Bitcoin as the payment mechanism of choice for cybercriminals. This preference stems from stablecoins’ inherent stability and ease of use, mirroring the benefits of traditional fiat currencies while operating within the digital realm. For criminals, stablecoins provide a much easier and faster means of moving and storing illicit funds in a more stable and cumbersome manner.

Sanctioned entities find stablecoins attractive. These entities are typically underbanked in their access to the U.S. dollar through traditional financial institutions. They see stablecoins as a more stable option that could help them avoid the restrictions and get the highly desired stable currency. One year later, the Financial Times went so far as to call stablecoins the criminal’s cryptocurrency of choice.

The Numbers Don't Lie

The statistics paint a concerning picture. This past year in 2024—an eye-popping $10.8 billion went into the hands of these “illicit-actor orgs.” This group encompasses those who perpetrate cybercrimes such as hacking, identity theft, cyber extortion and more. It includes the actors that supply the infrastructure and services, including laundering-as-a-service, that facilitate these activities.

In 2023, they fueled 70% of all crypto scam transactions and accounted for 63% of the illicit transaction volumes in 2024. Taken together, this data underscores just how important stablecoins have become within the cybercrime ecosystem.

How Cybercriminals are Exploiting Stablecoins

Sanctions Evasion and Regulatory Loopholes

Cybercriminals are using many methods to use stablecoins to facilitate criminal activity, such as sanctions evasion. In particular, stablecoins enable targets of sanctions to avoid efforts to prevent them access to stable currencies such as the US dollar.

Chainalysis recently reported on the extensive use of stablecoins in heavily sanctioned countries such as Iran and Russia. This trend is particularly pronounced on local exchanges like Nobitex and Garantex. These types of platforms make it easier for bad actors to move their funds while slipping through the cracks of international policy. Experts are equally worried that criminals will just go to the more lightly regulated peer-to-peer marketplaces where they can avoid the enforcement glare. Many crooks send money through these financial black holes in order to launder it. This tactic allows them to escape regulation and obscures the source of dirty money.

Risks and Challenges

Currently, more than 90% of all USD-stablecoins in circulation are issued through intermediaries. This places a huge amount of risk in times of market stress or when a stablecoin loses its peg. In these scenarios, intermediaries and issuers may find it difficult to meet every redemption request in a timely manner.

The Global Impact and What You Can Do

A Multi-Billion Dollar Problem

The potential global impact of sovereign cybercrime, made easily transferrable and anonymous through stablecoins, is enormous. Illicit addresses were paid a shocking $39.6 billion in 2022. This figure reverted back sharply to $24.2 billion in 2023. Based on historical trends, we could be looking at a total more like $51 billion. Illicit transaction activity accounts for an even smaller share of total on-chain transaction volume—just 0.14%. Even so, the scale of these numbers is staggering and concerning. In fact, between 2021 and early 2024, stablecoins largely controlled on-chain volume, maintaining a 50-80% share. Both scamming revenue (29.2%) and stolen funds (54.3%) revenue decreased in 2024.

Staying Safe: Tips to Avoid Stablecoin Scams

Here's some actionable advice:

  • Be wary of unsolicited offers: Be skeptical of any unsolicited investment opportunities or offers involving stablecoins, especially those promising unusually high returns.
  • Research thoroughly: Before investing in any stablecoin project, conduct thorough research. Understand the underlying technology, the team behind it, and any associated risks.
  • Use reputable exchanges: Stick to well-known and reputable cryptocurrency exchanges with strong security measures and regulatory compliance.
  • Secure your wallet: Use a secure cryptocurrency wallet with robust security features, such as two-factor authentication and multi-signature authorization.
  • Stay informed: Keep up-to-date with the latest news and developments in the cryptocurrency space, including emerging scams and fraud schemes.

The increasing use of stablecoins in cybercrime has become one of the greatest threats to our financial system and law enforcement agencies across the globe. Digital currencies are playing an ever-increasing role in the global economy. Keep learning and be one step ahead of fraud and other scams to protect yourself! MetaBlock X is committed to providing you with the knowledge and tools you need to navigate the crypto landscape safely and confidently.