Web3 Industry Development Report 2024: Criminal Activities Remain Rampant, but Regulatory Effects Are Beginning to Show

2024 is a milestone year for the Web3 industry. The market capitalization of cryptocurrencies and the adoption of infrastructure have reached unprecedented heights, but at the same time, criminals are increasingly utilizing cryptocurrency infrastructure to optimize their illegal activities or create new criminal patterns. This report clarifies the impact of compliance measures on the scale of the criminal industry by statistics and disclosing the scale of major types of crypto crimes, aiming to draw the industry's and government's attention to the dangers of crypto crime.

The situation of cryptocurrency crime remains severe

In 2024, the total amount received by high-risk addresses used for receiving, transmitting, and storing stablecoins on the Ethereum and Tron networks reached $649 billion, slightly higher than the previous year. This portion of high-risk activities accounted for 5.14% of the total stablecoin transaction activity for the year, although it decreased by 0.80% compared to 2023, it still remains significantly higher than the levels in 2021 and 2022.

In terms of stablecoin types, USDT on the TRON network has maintained a major share from 2021 to 2024. However, in 2024, the shares of USDT and USDC on the Ethereum network have both increased.

The scale of online gambling continues to grow

In 2024, the funding scale of online gambling platforms and their associated payment platforms reached $217.8 billion, an increase of over 17.50% compared to 2023. Notably, the usage ratio of USDC in the online gambling sector significantly rose to 13.36% in 2024, far exceeding the 5.22% of 2023. This indicates that despite USDC being issued and regulated by compliant entities, its adoption in the online gambling sector has still seen a significant increase.

The Scale of Black and Gray Industry Transactions Remains Unchanged

In 2024, business addresses related to transactions associated with the black and gray market in the Ethereum and TRON networks received over $278.1 billion, slightly higher than in 2023, while the transaction volume in these two years far exceeded that of 2021 and 2022.

Cryptocurrency escrow trading platforms play an important role in the development of the black and gray industries. For example, Haowang Escrow and its competitors in Southeast Asia have expanded their business scale to 2.64 billion USD in the fourth quarter of 2024.

The Scale of Crypto Fraud is Rapidly Increasing

In 2024, the scale of stablecoin receipts related to fraudulent blockchain addresses experienced explosive growth, reaching $52.5 billion, surpassing the total of the past few years. However, this astonishing growth trend may not be entirely accurate, as the statistics are limited by the methods of security vendors and the enhancement of fraudulent tactics by illicit entities.

The scale of money laundering begins to shrink

In 2024, blockchain addresses associated with money laundering activities received a total of $86.3 billion in stablecoins, slightly lower than in 2023 and on par with 2022. This may indicate that significant law enforcement actions and regulatory legislative activities by major policy entities over the past two years have effectively suppressed the money laundering crime situation in the cryptocurrency industry.

The on-chain freezing activities of stablecoins have significantly increased

In 2024, Tether and Circle froze over $1.3 billion worth of stablecoins on the Ethereum and Tron networks, which is double the scale of freezing in the previous three years. The trading volume of the frozen addresses in 2024 reached $12.9 billion, which is basically flat compared to 2023, indicating that on-chain crypto criminal activities began to become active several years ago, but effective crackdowns did not start until 2024.

Trends in OFAC and NBCTF Sanctions

The scale of funds related to sanctioned entities associated with the U.S. Office of Foreign Assets Control (OFAC) and the Israeli National Bureau for Counter Terror Financing (NBCTF) reached its peak in 2022, after which it has declined year by year. However, these sanctions have had a limited impact on criminal groups engaging in illegal activities using crypto infrastructure, as the anonymity and decentralization of crypto technology make it difficult to effectively sanction such entities.

Regulation Brings Positive Impact to Hong Kong

In 2024, Hong Kong's compliance policies have established a safer and more controllable crypto ecosystem through clear legal requirements, client fund protection, combating illegal activities, attracting institutional capital, and aligning with international standards. Data shows that after the third quarter of 2023, the proportion of risk stablecoins flowing into Hong Kong has sharply decreased, indicating that local stablecoin trading activities related to risky activities have been effectively suppressed.

Summary

Although the scale of cryptocurrency crime in 2024 remains significant, top-down compliance regulatory policies and bottom-up industry self-discipline have brought positive effects to the cryptocurrency industry in certain countries or regions. With the improvement of regulations and self-regulation within the industry, the cryptocurrency sector is expected to usher in a safer and more trustworthy future.