Binance, one of the world’s leading crypto exchanges, has recently debunked the myth that cryptocurrencies are mainly used by criminals. While it is true that some criminals have used crypto to facilitate illegal activities, such as money laundering, terrorism financing, and drug trafficking, the vast majority of crypto transactions are legitimate.
Binance takes on illegal crypto use
In recent years, the cryptocurrency and blockchain industries have expanded. However, a lack of understanding surrounding this technology has led to a number of false beliefs and misconceptions, causing many individuals to approach digital assets with unwarranted suspicion and trepidation. Binance has taken the time to dispel these crypto misconceptions!
The myth that crypto is only used by criminals – Since the earliest days of this new form of digital currency, the use of cryptocurrencies for illicit activities has reportedly been a topic of concern. The public’s perception that cryptocurrencies are intrinsically linked to criminal activities (such as money laundering, drug trafficking, and cybercrime) is primarily attributable to early media coverage of cryptocurrencies. Binance specifically mentions the notorious Silk Road marketplace.
Silk Road was an online black market that operated on the dark web between 2011 and 2013, offering a platform for the anonymous purchasing and selling of illegal goods and services using Bitcoin. The market was notorious for its participation in narcotic trafficking and its association with cryptocurrency. As a result, Silk Road’s illegal activities contributed to cryptocurrencies’ negative reputation in the mainstream media.
According to Binance, the anonymity and decentralization of cryptocurrencies have prompted concerns that they facilitate illicit activity. Many media outlets frequently choose to concentrate on high-profile cases of crypto-related crimes, reinforcing the notion that digital assets are predominantly utilized by those wishing to engage in illegal activities while evading detection.
On-chain data points to the use of crypto by ordinary people
The reality is that crypto is predominantly used by average citizens and is a legitimate tool for a variety of everyday transactions. More than 120 million consumers have registered with Binance alone. As with any new (or extant) technology, criminals will always employ it for their own nefarious ends.
Despite the industry’s exponential growth, illegal activity accounted for 0.15% of crypto transactions in 2021, down from 0.62 % in 2020, and money laundering accounted for 0.05%. And do not simply rely on Binance’s assurances. This information comes from Chainalysis, a decentralized blockchain analysis company.
Chainalysis data is frequently used by government agencies, such as the United States Federal Bureau of Investigation (FBI), Drug Enforcement Administration (DEA), and Internal Revenue Service Criminal Investigation (IRS CI), and the United Kingdom’s National Crime Agency (NCA), to investigate and combat crypto-related crimes.
According to the United Nations Office on Drugs and Crime (UNODC), between $800 billion and $2 trillion is laundered annually in the traditional fiat sector, which is roughly 2-5% of the global GDP. Compared to cryptocurrency, the sum is a negligible 0.03% of that quantity.
Criminals dislike crypto because the transactions are public and perpetually recorded, which allows investigators to track down criminals. Unlike traditional financial investigations, the transparent nature of crypto makes it simpler to identify evil actors.
Binance’s take on criminals and transparency
Blockchain is transparent by design. Each and every transaction is recorded in a public ledger. Anyone can examine the entire codebase at any time. The use of cryptography for illicit purposes leaves an excellent paper trail for prosecutors to secure convictions.
According to Europol and the Basel Institute on Governance, cryptography is essential for combating organized crime. It is impossible to move significant sums of money without being detected. In truth, crypto exchanges remain one of the most important allies in the fight against criminal activity. In 2021, Binance assisted in dismantling a cybercriminal organization that laundered $500 million through ransomware attacks.
Law enforcement agencies continue to lead the collective effort to combat crime. Globally, agencies have prioritized acquiring the necessary resources, skills, and tools, as well as partnering closely with crypto companies.
As per recent reports, In the United States, the Treasury Department has requested additional funding to monitor and combat crypto crime, and the Department of Justice and Federal Bureau of Investigation have established national crypto enforcement task forces.
In addition, the global monitor for money laundering and terrorism financing, the Financial Action Task Force (FATF), has issued standards for virtual assets that mirror those for fiat currency. As of March 2023, however, only 19 of the 200 countries that have committed to FATF standards have implemented the one for virtual assets.
Ordinary folks are the primary users of crypto. According to independent research, only 0.15% of crypto transactions involve illegal activities. According to Binance, if you’re a criminal, using crypto is more likely to get you arrested than using cash or the traditional financial system.
The notion that crypto is primarily a hotspot of criminal activities is vastly exaggerated. In fact, the vast majority of crypto transactions and investments are legitimate and focused on real-world use cases with the potential to alter the global economy.
The development of blockchain technology has created new potential for financial innovation, and cryptocurrencies are only one facet of this fast-changing world. From decentralized finance (DeFi) to non-fungible tokens (NFTs), the potential uses of crypto and blockchain technology are numerous and diverse.