Report reveals online gambling drives crypto crime surge in 2024; expert weighs in
The continued expansion of the Web3 industry in 2024 was accompanied by the persistent, and in some cases growing, use of cryptocurrency infrastructure by criminal organisations, according to the 2025 Crypto Crime Report released by blockchain analytics firm Bitrace. The report highlighted trends across key categories of crypto crime, with online gambling emerging as a central vector for illicit activity.
While industry market capitalisation and adoption of decentralised infrastructure reached new levels in 2024, Bitrace’s report makes clear that “criminal enterprises increasingly leveraged crypto infrastructure to optimise operations or create new crime paradigms.”
Online gambling platforms handle over $217 billion
One of the standout findings of the report is the expansion of stablecoin inflows into online gambling platforms. According to Bitrace, addresses associated with online gambling and related payment processors received $217.8 billion in 2024 — an increase of over 17.5 percent from the previous year.
The report said the growth coincides with a notable shift in the types of stablecoins used for gambling transactions. USDC, a stablecoin issued by Circle and generally associated with regulated financial environments, saw its share of these inflows jump from 5.22 percent in 2023 to 13.36 percent in 2024. Bitrace attributes this to the “expanding market presence” of USDC, noting its adoption even in high-risk sectors such as online gambling.
Speaking with SiGMA News, Justin d’Anethan, Head of Sales at Liquifi, a token launch advisory and distribution firm, contextualised the rise. “Stablecoins have proven their product-market fit by enabling cheap, fast, and global transfers that legacy finance struggles to match. This utility naturally attracts illicit use attempts, but many stablecoin issuers mitigate risks by partnering only with vetted entities and conducting thorough KYC and source-of-funds checks,” d’Anethan said.
He added that emerging solutions could further curb misuse. “On-chain ID protocols and zero-knowledge proof-based KYC tokens offer a promising way to verify users’ legitimacy while preserving privacy and security.”
Stablecoin use by criminal entities remains widespread
The broader landscape of high-risk stablecoin activity remains a concern. Bitrace classified high-risk addresses as those involved in the receipt, transfer, or storage of stablecoins for illicit purposes — particularly on the Ethereum and TRON networks.
In 2024, such addresses received approximately $649 billion, a slight increase from the previous year. Although the proportion of these high-risk transactions within the total stablecoin volume declined to 5.14 percent, down 0.80 percent from 2023, Bitrace notes that the figure is still well above 2021 and 2022 levels.
TRON-based USDT continued to dominate these inflows, though Ethereum-based USDT and USDC also gained a share, suggesting diversification of networks used for illicit activity.
Black and grey markets hold their ground
Bitrace revealed that there is a continued flow of funds to black and grey markets last year. The report said that these activities fall outside the scope of legal trade, often involving goods or services of questionable legality.
A major component of these networks is the use of crypto escrow services. One platform highlighted is Huione Guarantee, which, along with similar Southeast Asian services, saw transaction volumes climb to $2.64 billion by the fourth quarter of 2024.
Fraud sees sharp uptick in 2024
Fraud-related crypto activity surged in 2024. According to Bitrace, blockchain addresses linked to fraudulent schemes received $52.5 billion in stablecoins — more than the combined totals of all previous years.
Bitrace, in its report, cautioned that this figure may partly reflect better detection and broader blockchain surveillance. Nonetheless, it signaled growing operational sophistication among fraudsters, testing the limits of enforcement and analytics.
“The future lies in enhancing protections, improving on-chain analytics, and fostering industry-wide rapid response protocols to hacks. Law enforcement is also becoming more adept at tracing illicit flows and apprehending criminals, which strengthens deterrence,” d’Anethan said emphasising the need for a coordinated response.
Money laundering declines slightly
In contrast to the broader uptick in crypto crime, stablecoin flows to money laundering-related addresses fell marginally in 2024 to $86.3 billion. Bitrace attributed this to stepped-up enforcement and regulatory efforts.
Centralised exchanges remain critical to laundering operations due to their liquidity. However, Bitrace noted a decline in high-risk transactions through OKX, pointing to improved compliance procedures.
Sanctioned entities adapt to crypto resilience
Meanwhile, Bitrace observed a continuing decline in inflows to sanctioned entities following peaks in 2022. Nevertheless, the resilience and semi-anonymous nature of blockchain technology enables sanctioned groups to adapt swiftly.
The report urged regulators to deepen international collaboration to disrupt these networks effectively. Among the few bright spots, Hong Kong is praised for regulatory progress in 2024. Legal clarity, tighter enforcement, and growing institutional participation helped reduce high-risk stablecoin flows to local Web3 entities. Although the shift raised operational costs, the report noted a decline in hacks and stronger investor confidence as benefits.
Regulation remains essential amid industry growth
While the Web3 and crypto sectors saw a revival in 2024, Bitrace’s findings illustrate that blockchain misuse continues at scale — particularly via online gambling, fraud, and black market activity.
“Ultimately, balancing innovation and security requires collaboration among issuers, regulators, and users to implement transparent, privacy-respecting safeguards that deter misuse without stifling growth,” d’Anethan concluded.
