Boom time for crypto-enabled fraudsters

Illicit activities have tarnished the growth of cryptocurrencies, and it’s a challenge for law enforcement to keep up with the criminals.

Crimes such as money laundering, fraud, and straightforward theft have existed as long as there has been value to be held and transferred. However, the past 15 years has offered criminals quicker and more comprehensive access to the global market than ever before. 

Since the launch of Bitcoin 16 years ago, crypto assets have become the preferred payment method on darknet marketplaces, such as the infamous and dismantled Silk Road. These marketplaces were used to promote and sell illegal drugs, weapons and extreme material, such as pornography.

According to the UK Metropolitan Police’s Little Book of Crypto Crime, digital assets used in crime, and decentralised financial structures, offer decreasing fees for services, quick asset transfers, relative anonymity, and a lack of centralised authorities — all of which appeal to criminals. 

According to Emma Henshaw, global investigator at TRM Labs, the regulators, law enforcement officials and lawyers involved in tracking the use of these digital assets in criminal activity tend to categorise offences as either “cyber-dependent” or “cyber-enabled”.

Cyber-dependent vs cyber-enabled

Cyber-dependent crimes are driven by digital technologies and could not exist without computers, said Henshaw. They involve actions such as hacking, malware distribution and denial-of-service(DoS) attacks, which are specifically designed to target or exploit computer systems — for example, spreading a virus to steal data or disrupt a network.

However, cyber-enabled crime offers technology, such as distributed ledgers and cryptocurrency wallets, which can enable and amplify illicit activities that also exist in the physical realm, including fraud, stalking and the distribution of illegal products.

Initially, criminals took advantage of the pseudo-anonymous nature of decentralised financial networks, using them to send and receive illicit funds and avoid detection. Those who engage in ransomware attacks — whereby a computer network is hacked and held hostage in exchange for a ransom — may demand payments in cryptocurrency assets because they often lie outside established, regulated financial systems.

Despite this, the immutable nature of blockchains means that tracing stolen or illicitly gained funds might be easier for law enforcement officials, said Henshaw. 

When investigating crime that involves tracing funds, a police officer would have to make repeated requests to different financial institutions, sometimes outside jurisdictions, to get customer data and analyse that data, she added. These types of investigations often take anywhere between six months to two years.

The high degree of transparency blockchain offers means that all transactions and data on the blockchain are recorded and publicly accessible to all network participants, and this transparency can allow investigators to obtain parallel information when tracing funds, said Henshaw. 

Exploiting underinvestment?

Aidan Larkin, co-founder and CEO of Asset Reality, agrees. Law enforcement officials are realising that “if criminals are using the blockchain”, then they need to “investigate on the blockchain”, said Larkin. After all, the Silk Road black market was brought down by an “undercover officer” buying items on the marketplace and “tracing the Bitcoin”.

He believes global fraudsters are currently living in a “boom time” enabled by crypto assets and other digital technologies. 

“They can just set up multiple accounts, multiple chatbot inquiries, and multiple AI agents,” he said. “It’s exploded in ways that most ordinary people haven’t wrapped their head around, the factory style of fraud now. It’s entire call centres of people using weaponised AI and weaponising chatbots.”

Other factors include the high return on investment such fraud offers criminals and the “decades of underinvestment in law enforcement” targeting these activities — the police haven’t been given the resources to deal with big data analytics and crime enabled by artificial intelligence (AI), said Larkin. 

Henshaw at TRM Lab believes the nature of cryptocurrencies has connected groups and organised crime that “never would have connected before”. However, with the decentralised financial environments, criminals suddenly have access to individuals with extensive technical skills. 

“What you get is all these groups being connected by their money laundering networks,” she added. 

For instance, law enforcement investigating the global drug trade can follow the Chinese money laundering system, which is connected to a Russian ransomware group that funds into the same money laundering system, which then funds electrical parts for drones and terrorism financing out of Cambodia. 

High-profile purchases

However, some criminals profiting from cyber-enabled activities often expose themselves in very human ways. Assets held in crypto, gained from activities such as drug dealing, tend to be high value. This means to launder the funds, high-value items, such as luxury property in Dubai or super yachts, are often purchased to hide the funds, she explained. 

“It’s all very well getting your cryptocurrency — and maybe you’re disciplined enough to sit on those funds for a long period of time — but that doesn’t suit crime. There needs to be some tangible value for the criminal, and what’s the best way to do that? It’s to buy a nice condo that overlooks the ocean.”

This often leads to “the expensive champagne bottles and nights out” being “posted on Instagram”,  she said, adding some criminals would do well to hire a better social media manager to advise against flaunting the high-value bounty.

Stark statistics

Yet TRM Labs’ own 2025 Crypto Crime Report found that while total crypto transaction volume grew to more than $10.6 trillion (up 56% from 2023), volumes in crypto crime dropped to $45 billion — a 24% decrease since 2023.

Risks persist, however: terrorist financing through crypto expanded, which increased crypto use by groups such as ISIS-K, Hamas, and Hezbollah. Stablecoins, especially USDT from Tether, are the preferred currency choice. 

Other statistics collected by TRM Labs in the report show ransomware resulted in over 5,600 attacks, and a $75 million payment to the DarkSide group. Crypto-related hacks increased, with North Korea responsible for $800 million of the $2.2 billion stolen in 2024. 

Meanwhile, fraud and scams may be down 40% on 2023’s figure but are still significant, netting $10.7 billion. And crypto-enabled drug sales rose 19% to $2.4 billion.

All of which might explain why the UK police still advises, in its “little book” released earlier this year: “It is important to use caution when conducting thorough research and to follow legal guidelines while using crypto and digital assets to avoid inadvertently participating in or supporting criminal activities, including money laundering and terrorist financing.”