Do you think Crypto is being used for illegal activities? Read this report first

Cryptocurrency crimes may be evolving, but the proportion of such illegal transactions remains significantly low.

According to TRM Labs’ latest annual report on Crypto Crime, only 0.4% of all digital asset trading volume in 2024 was related to illegal activity, a 51% decline from the previous year despite a surge in the market as a whole.

Even if the total volume is rising, illegal crypto activity will plummet

The total volume of trading in the crypto sector rose 56% last year, surpassing $10.6 trillion, according to the blockchain intelligence company. However, the illegal trend, which is estimated to have fallen from nearly $59 billion in 2023, has dropped to about $45 billion.

The report shows that crypto crimes are primarily controlled by sanction evaders, fraudsters and funds related to blocklisted addresses. Collectively, these categories represent more than 85% of the illegal amounts identified by the TRM.

Furthermore, networks such as Tron, Ethereum, and Bitcoin were the top venues for such activities. Interestingly, Tron alone accounted for 58% of all crime flows, but its illegal trade volume actually fell by half compared to 2023. TRM attributed this success in part to the effectiveness of the T3 Financial Crime Unit (T3 FCU).

Since its launch, it has supported a freeze of over $130 million, with nearly 20% of the USDT on Tron’s blocklisted USDT already being returned to victims or authorities.

Meanwhile, recently targeted sanctions against major Russian and Iranian exchanges such as Garantex and Nobitex, which are targets for the $49 million hack, have imposed 33% of inflows into restricted jurisdictions.

Permanent threats and evolving crime playbook

Despite the overall decline, the TRM has issued an alarm about a new trend calling for vigilance. He said that terrorist financing, in particular, involving groups like ISIS-Khorasan (ISKP), is increasingly dependent on Crypto, and despite growing interest in privacy coins like Monero (XMR), Stablecoins remain a major option.

Hack also witnessed an increase, with $2.2 billion being stolen, representing a 17% increase, primarily targeting the Defi protocol. As reported by other researchers, North Korean actors were disproportionately responsible, using sophisticated methods to steal nearly $800 million, often focusing on major private thefts. Furthermore, their laundry tactics are rapidly leveraging and adapting to move funds across dispersed bridges and chains, making them extremely difficult for law enforcement.

But perhaps the most worrying emerging threat is the rapid adoption of AI by fraudsters. According to TRM, criminals are currently using large-scale language models (LLM) to create highly personalized fraud personas, generating persuasive deep-faki videos for fear and investment scams, and creating sophisticated phishing messages.

It also uses AI to create a fake ID to bypass KYC and generates an unconsensual, explicit image. Blockchain research firms hope for a significant expansion of AI-powered crime in 2025.