U.S. Treasury: 'Use of Virtual Assets For Money Laundering Remains Far Below That of Fiat Currency'

One of the most common arguments against Bitcoin and digital assets has been that its "predominantly used for Illicit activity."

What those people don't understand is Bitcoin has an open and transparent nature which makes off ramping illicit funds in first-world countries almost impossible.

U.S. Treasury on Virtual Currencies and Illicit Activities

The U.S. Department of the Treasury published reports that indicate the use of bitcoin and other cryptocurrencies for illicit activity is far outstripped by the use of traditional assets.

Critics can no longer credibly present the illusion of overwhelming illicit activity to discredit Bitcoin; Now the foremost experts in the world say it is not a major threat when compared to other methods.

Excerpts From the Reports:

“(T)he use of virtual assets for money laundering remains far below that of fiat currency and more traditional methods.”

–“The 2022 National Money Laundering Risk Assessment,” Page 41

“(T)errorist use of virtual assets appears to remain limited when compared to other financial products and services.”

–“The 2022 National Terrorist Financing Risk Assessment,” Page 23

“There is no evidence that a proliferation network has used a virtual asset to procure a specific proliferation-sensitive good or technology…”

–“The 2022 National Proliferation Financing Risk Assessment,” Page 29

Getting Caught:

Let's look at the Bitfinex Hackers who in 2016 stole $75Million USD of Bitcoin, which recently was valued at over $4.5 Billion USD.

For years, most of the money sat in a wallet untouched. But, once the currency slowly began to move out of the wallet and into the traditional banking system (off-ramps connected to SS#'s), investigators were able to start tracing the transactions to people in the real world.

This led straight to a married couple in New York: Ilya Lichtenstein and Heather Morgan, age 34 and 31, who were arrested and charged with conspiracy to commit money laundering and conspiracy to defraud the United States.

Eventually, the funds made their way into more traditional financial accounts held by Lichtenstein and Morgan, who spent the money on gold, NFTs and a Walmart gift card that was used to pay for Ubers and a Playstation, according to charging documents.

These purchases helped authorities trace the funds from the hack back to the duo's delivery address.

Colonial Pipeline Hackers

The U.S. Department of Justice was also able to track and recover the Colonial Pipeline hack money which was paid in Bitcoin.

Federal investigators tracked the ransom as it moved through a maze of at least 23 different electronic accounts belonging to DarkSide, the hacking group, before landing in one that a federal judge allowed them to break into, according to law enforcement officials and court documents.

Criminals will soon realize digital assets are a great vehicle for getting caught.

The Overwhelming Stats

Last year I wrote an article referencing the CIA report on Illicit activities of digital assets VS traditional assets like FIAT.

The CIA at the time concluded digital assets had less than 1% of all transactions being used for illicit activity. While the traditional banking system has a rate of just less than 3% of transactions (with much more volume).

The most recent edition of the “Crypto Crime Trends” report published by blockchain analysis firm Chainalysis, for instance, found that just 0.15% of cryptocurrency transaction volume in 2021 involved “illicit” addresses.

Facts Over Feelings

When I think of out-of-touch individuals on Bitcoin, none are more prolific than Janet Yellen.

Probably a distant relative to Peter Schiff, Yellen seems to conjure her feelings over facts her own government keeps providing her.

Recently at a press meeting, Yellen said " cryptocurrencies are “a particular concern” when it comes to criminal activity and terrorist financing.

Yellen continued, “I think many (cryptocurrencies) are used, at least in a transaction sense, mainly for illicit financing. And I think we really need to examine ways in which we can curtail their use, and make sure that anti-money laundering (sic) doesn't occur through those channels.”

Sorry, Janet that simply isn't really the case.

You're somewhat contradicting the: Central Intelligence Agency, U.S. Department of Treasury, United Nations finance committee, FinCen, National Security Council, Chainalysis, Federal Bureau of investigation, The Whitehouse, and Senate finance committee who have all disproved this.

There's seemingly no big bad wolf here, and ironically for criminals, Blockchain and DLT (distributed ledger technology) have ended up being the Brick house the big bad wolf couldn't infiltrate.