Bitcoin is still the “most abused” cryptocurrency by criminals despite the introduction of privacy coins like Monero, according to a new report from Europol’s Internet Organized Crime Threat Assessment.

O report found that Bitcoin (BTC) is the most demanded asset by ransomware groups for their payments — presumably due to the ease with which non-savvy users can obtain Bitcoin rather than assets like Monero (XMR).

Still, criminals tend to convert Bitcoin into stablecoins to avoid market volatility, especially when obtained through investment fraud, the Europol unit found. Law enforcement agencies are concerned about how effectively their prosecution efforts are thwarted by non-compliant virtual asset service providers, especially when they are based overseas.

The report’s authors also shared concerns that the approval of spot Bitcoin ETFs could create new opportunities for scammers. The reasoning is that people with less experience in cryptocurrencies are likely to gain access to Bitcoin-related investments that they do not fully understand, Europol writes. And Bitcoin ETFs make the companies that manage such investment products large-scale centralized targets.

“Companies issuing cryptocurrency ETFs will also have to hold large reserves of cryptocurrency, which could make them valuable targets for fraudsters,” they wrote.

Monero, the rising star of crypto crime

While Bitcoin remains the most widely accepted cryptocurrency among ransomware groups, the report explicitly mentions Monero as a sometimes accepted alternative. Europol describes Monero as a privacy coin and notes that other cryptocurrencies are often exchanged for XMR to leverage its privacy features and make it easier to hide funds.

The report highlighted the increased use of cryptocurrency exchange services for money laundering purposes. Europol mentions the exchange of Monero and other privacy coins as a modus operandi.

The report also mentions a cryptojacking scheme discovered in January 2024 in Ukraine that secretly mined more than €1.8 million ($1.95 million) worth of cryptocurrencies, including Monero, Ethereum (ETH) and Toncoin (TON).

Cryptocrime Trends

Financial crime remains the main illicit use of cryptocurrencies, especially investment fraud and money laundering. Europol claims that rising cryptocurrency prices and media attention have exacerbated the prevalence of investment fraud cases. Cryptocurrencies are the most reported product offered in fraudulent investment schemes.

The US dollar-pegged stablecoin Tether (USDT) on Tron (TRX) is increasingly involved in crypto crime — presumably due to the network’s low fees. Overall, the use of altcoins for illicit activities is also apparently growing, Europol says.

Cryptocurrency laundering involves increasingly frequent shadow banking operations. Crypto debit cards for quick conversion into cash at ATMs are also gaining popularity.

Privacy as an obstacle

Europol explicitly mentions privacy laws as an impediment to law enforcement agencies. The report says:

“Conventional E2EE [end-to-end encryption] communication platforms are increasingly used by offenders,” the agency writes. “The current regulatory framework regarding the protection of personal communications via E2EE creates challenges for LEAs [law enforcement agencies] legal access to criminal communications”.

The report went on to highlight that Web3’s emphasis on decentralization will lead to communications that are “neither controlled nor regulated by governments or private companies.

Peer-to-peer (P2P) networks and blockchains are fully owned and controlled by their users, which Europol notes makes them fertile environments for crime.

“Decentralization, blockchain technology, and P2P networks will continue to provide opportunities for cybercriminals as they make it easier to conduct transactions anonymously and out of sight of authorities,” the authors wrote.

These statements follow a 2022 report in which Europol spokespeople claimed that cryptocurrencies provide a new tool for law enforcement agencies. Agency representatives pointed to the pseudonymous nature of most blockchain networks and the ability to trace — to some extent — cryptocurrency transactions “offering an unprecedented opportunity” to investigate organized crime and money laundering networks and eventually recover stolen funds.

While these statements may at first seem to stand in stark contrast to new concerns about the increasing decentralization of the internet, they are not. Instead, they show that decentralization cuts both ways. Europol doesn’t mind when criminals use pseudonymous but public blockchains like Bitcoin’s, and encrypted but not end-to-end instant messaging services like most social media.

These tools leave a wealth of traces on blockchains and public servers that investigators can then unravel as they build their cases. Still, a company can’t respond to a subpoena with E2EE-protected user messages because, by definition, they don’t have them. And there’s no unencrypted transaction data to be found on blockchains like Monero’s.

This is proving to be a major obstacle for law enforcement, writes Europol.

Decentralized services can also prove nearly impossible to stop, meaning that even when discovered, law enforcement has no tools to stop some illegal operations. A good example of such a service is Tornado Cash, which despite being a sanctioned entity by the Office of Foreign Asset Control has saw nearly $2 billion in inflows this year and is still fully operational.

Edited by Stacy Elliott.

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