Nasdaq’s “Global Financial Crime Report” has shed light on the scale of illicit funds flowing through the global financial system, reaching a staggering $3 trillion in 2023. While addressing various aspects of financial crime, this comprehensive report notably omits any mention of cryptocurrencies, including Bitcoin and stablecoins, as conduits for these illicit funds.
Nasdaq’s alarming findings
Nasdaq’s report paints a grim picture of the world’s ongoing battle against financial crime. The report estimates that a substantial portion of the illicit funds, approximately $782.9 billion, was connected to drug trafficking, while another $346.7 billion was linked to human trafficking. Furthermore, the report highlights that $11.5 billion financed terrorist activities, and an alarming $485.6 billion was associated with fraud.
Nasdaq’s CEO, Adena Friedman, acknowledges that financial institutions have been at the forefront of addressing these issues for decades. However, she underscores the importance of recognizing that no single company can effectively combat financial crime in isolation.
Cryptocurrencies missing in action
What’s notably absent from Nasdaq’s report is any mention of cryptocurrencies, despite their prominence in the global financial landscape. Cryptocurrencies, including Bitcoin and stablecoins, have long been scrutinized for their potential use in facilitating illicit activities due to their perceived anonymity and ease of cross-border transactions.
Gabor Gurbacs, the Director of Digital Assets Strategy at VanEck, raises an intriguing point. He suggests that the report’s omission of cryptocurrencies implicates the mainstream financial system as the primary conduit for these crimes, as opposed to digital assets.
Paolo Ardoino, the CEO of Tether, expresses deep concern about the scale of financial crime revealed in the report. He emphasizes the need for multilateral cooperation to effectively combat these illicit activities. Tether, a prominent stablecoin issuer, has been proactive in collaborating with law enforcement agencies worldwide to freeze addresses involved in illegal transactions.
Ardoino’s call for legacy financial institutions to follow Tether’s example and engage in cooperative efforts to curb financial crime resonates with the report’s overarching message.
Chainalysis echoes the findings
The Nasdaq report finds corroboration in a recent crypto crime report by Chainalysis. This analysis similarly refrains from implicating cryptocurrencies as the primary culprits in illicit transactions. Instead, it highlights the utilization of stablecoins, primarily for cashing out into fiat currencies through exchanges. The report indicates that $24.2 billion was involved in these transactions, marking a significant drop in the value used by illicit cryptocurrency addresses.
Blockchain transparency, albeit not entirely foolproof, plays a crucial role in deterring outright criminal activities within the crypto space. However, technologies like crypto mixers, such as Tornado Cash, can obfuscate transaction trails, albeit not providing complete immutability or untraceability.
