From Anonymity to Accountability: Is Crypto Still the Go-To Tool for Organised Crime?

Cryptocurrency has come a long way since Bitcoin’s inception in 2009. Once hailed as a revolutionary financial technology, it quickly gained notoriety for its association with the criminal underworld. The pseudonymous nature of blockchain transactions, coupled with limited regulatory oversight, made digital currencies an attractive vehicle for illicit finance facilitating drug trafficking, money laundering, ransomware attacks and more.

However, as the technology matured, so too did the scrutiny from regulators, law enforcement agencies and the crypto industry itself. With significant advancements in blockchain analytics and the global implementation of stricter compliance regimes, the question arises: is cryptocurrency still the go-to tool for organised crime, or has the tide turned in favour of transparency and accountability?

This article traces the evolution of cryptocurrency’s role in organised crime, charting its rise through darknet marketplaces and ransomware schemes, the increasing effectiveness of blockchain forensics, and the shifting strategies employed by criminal actors in response to mounting enforcement pressure.

From Infamy to Forensics: The Evolution of Crypto & Financial Crime

The launch of Bitcoin in 2009 marked a pivotal moment in financial innovation. Promising decentralisation, peer-to-peer value transfer and freedom from traditional banking systems, it also introduced a new paradigm: pseudonymous transactions. For early adopters, this represented privacy. For criminals, it presented opportunity.

• 2011–2013: Silk Road & the Illusion of Anonymity

One of the earliest and most high-profile examples of cryptocurrency’s misuse was the Silk Road, a darknet marketplace launched in 2011. The platform enabled the trade of illegal goods including drugs, weapons, and forged documents with Bitcoin serving as the primary medium of exchange. At the time, many believed that Bitcoin transactions were untraceable, offering criminals a secure means of conducting business. However, when the FBI shut down Silk Road in 2013, it seized approximately 144,000 BTC (now worth over $3.6 billion) highlighting that these transactions, while pseudonymous, were permanently recorded on the blockchain.

• 2013–2015: The Anonymity Myth Persists

  Despite Silk Road’s closure, criminal actors continued to use cryptocurrencies under the assumption that law enforcement lacked the tools or expertise to trace blockchain activity. During this period, various darknet marketplaces and crypto mixing services (such as Helix and Bitcoin Fog) emerged to further obfuscate transaction trails. Law enforcement agencies were still building capabilities, and blockchain analytics was in its infancy, allowing illicit crypto activity to grow largely unchecked.

  
  

• 2015–2019: The Rise of Blockchain Analytics

  The tide began to turn in the latter half of the decade. Companies such as Chainalysis, Elliptic, and CipherTrace began developing blockchain analysis software capable of de-anonymising wallet clusters, identifying links between addresses, and flagging suspicious transaction patterns. These tools used advanced heuristics, behavioural analysis, and integration with dark web intelligence to map illicit crypto flows. Law enforcement agencies across the US, UK, EU and Asia started integrating these tools into investigations, significantly improving their ability to trace criminal proceeds across the blockchain. This period also saw increased collaboration between the private sector and governments. Exchanges began implementing KYC and AML controls, as regulators such as the Financial Action Task Force (FATF) issued guidance on virtual asset service providers (VASPs). The anonymity once taken for granted was now under siege.

  
  

• 2017: Ransomware on a Global Scale

  The  WannaCry ransomware attack in 2017 demonstrated the global reach and disruptive power of crypto-enabled crime. Affecting over 200,000 systems in more than 150 countries including critical infrastructure like the UK’s NHS, attackers demanded Bitcoin payments from victims to unlock their data. Although the ransom amounts were relatively small, the incident underscored how easily cryptocurrency could be used to facilitate cross-border cyber extortion. WannaCry is widely believed to have originated from North Korea’s Lazarus Group, demonstrating the growing intersection between nation-state cybercrime and crypto finance.

  
  

• 2020: Retrospective Recovery & Silk Road Revisited

  In November 2020, US authorities  seized over 69,000 BTC (then valued at more than $1 billion) from a wallet linked to Silk Road. The coins had remained dormant since the marketplace’s closure in 2013. Using sophisticated blockchain tracing techniques, investigators identified an individual who had exploited vulnerabilities in Silk Road to siphon off funds. This retrospective recovery illustrated both the durability of blockchain records and the dramatic advancement of investigative tools.

  
  

• 2021: Colonial Pipeline & Ransom Payment Traced

  In May 2021, the Colonial Pipeline, one of the largest fuel pipelines in the US, was shut down by a ransomware attack orchestrated by the Russia-linked group DarkSide. The company paid a $4.4 million Bitcoin ransom, but within weeks, DOJ announced it had recovered 63.7 BTC, valued at approximately $2.3 million at the time. Investigators traced the payments across wallets and were ultimately able to retrieve the funds by accessing a private key held in a centralised exchange; a landmark moment that demonstrated cryptocurrency’s increasing traceability.

  
  

• 2022: Bitfinex Hack & A Record-Breaking Seizure

  In February 2022, the DOJ arrested two individuals for attempting to launder more than $4.5 billion in Bitcoin stolen during the 2016 Bitfinex exchange hack. The investigation involved tracing the movement of funds through thousands of complex transactions across multiple wallets. Authorities ultimately recovered approximately $3.6 billion, making it the largest crypto seizure in history at the time and cementing blockchain analytics as a vital law enforcement tool.

  
  

The arc of crypto's history shows a clear trend: from the illusion of anonymity to the reality of traceability. Public blockchains are now recognised as double-edged swords. Whilst they enable decentralised finance, they also offer transparent, immutable records that can be mined for intelligence. Today, a combination of regulation, compliance by exchanges, private-sector innovation, and public-sector expertise is transforming cryptocurrency from a haven for illicit finance into a valuable tool for combatting it.

The early years were marked by criminal exploitation and limited oversight. But as enforcement and forensic capabilities have evolved, so too has the risk calculation for would-be offenders. The message is increasingly clear: no matter how sophisticated the scheme, the blockchain never forgets.

The Changing Face of Crypto & Organised Crime

Cryptocurrency remains a component of the criminal toolkit, but its status as the primary vehicle for illicit finance is increasingly under threat. The early appeal of digital assets - anonymity, speed, and borderless transfer - has been eroded by stronger compliance frameworks, improved blockchain analytics, and more effective law enforcement cooperation. Nevertheless, organised crime groups continue to adapt, exploiting newer mechanisms and more sophisticated tools to stay ahead of detection.

• Privacy Coins: The Search for True Anonymity

While Bitcoin remains the most commonly used cryptocurrency in crime due to its liquidity and brand recognition, privacy-enhancing coins such as Monero (XMR), Zcash (ZEC), and Dash (DASH) are becoming more attractive for illicit transactions. These coins are specifically engineered to obscure the sender, receiver and transaction amount, features that make them far harder to trace than Bitcoin. Monero, in particular, has become the de facto standard for darknet transactions. Its use of ring signatures, stealth addresses, and confidential transactions means even sophisticated blockchain analytics tools struggle to track its flows. This has raised alarm across the global law enforcement community. In 2021, the US Internal Revenue Service (IRS) offered a $625,000 bounty for anyone able to develop effective tools for tracing Monero transactions—a stark indication of the growing challenge these privacy coins pose.

Despite these efforts, mainstream adoption of privacy coins remains limited, largely due to their association with illicit finance and subsequent delistings from regulated exchanges. However, they continue to thrive in unregulated or decentralised environments where oversight is minimal.

• Decentralised Exchanges & DeFi: The New Laundromat

The rapid rise of decentralised exchanges (DEXs) and decentralised finance (DeFi) platforms has introduced new challenges for anti-money laundering (AML) enforcement. Unlike centralised exchanges, which are increasingly subject to stringent know-your-customer (KYC) and transaction monitoring requirements, DEXs allow users to swap assets peer-to-peer without identity verification. This feature makes them an attractive option for criminals seeking to launder illicit proceeds. According to Chainalysis, at least $1.2 billion in illicit crypto was laundered through DEXs and DeFi protocols in 2022 alone. These platforms also enable the use of automated smart contracts, flash loans, and complex token swaps—techniques that can rapidly obfuscate the origin of funds. Law enforcement agencies face significant hurdles in investigating crimes facilitated by DeFi, as the absence of a central authority limits the ability to serve legal orders or freeze assets. This has created a parallel financial ecosystem that, while revolutionary, presents serious risks when exploited by bad actors.

• Ransomware-as-a-Service: The Criminal Franchise Model

Cybercriminal groups are increasingly adopting Ransomware-as-a-Service (RaaS) models, offering ready-made malware kits to affiliates in exchange for a share of the ransom. This 'franchise' approach has lowered the barrier to entry for aspiring cyber extortionists and dramatically expanded the scale of ransomware campaigns. Prominent groups such as Conti and REvil have been linked to some of the most lucrative ransomware operations in recent years. In 2021, Conti alone extorted over $180 million in Bitcoin, according to Chainalysis making it one of the most profitable cybercriminal syndicates on record. Payments are almost exclusively demanded in cryptocurrency, and these funds are typically laundered through a combination of exchanges, mixers, and privacy coins. The evolution of ransomware operations, from isolated attacks to scalable criminal enterprises, has made crypto traceability a top priority for law enforcement. However, as attackers grow more agile and move deeper into the DeFi ecosystem, containment remains a formidable task.

• Smurfing & Mixing Services: Obfuscation by Design

To evade detection by compliance systems, criminals often employ smurfing, the practice of breaking down large transactions into smaller amounts to avoid triggering reporting thresholds. These fragmented transactions are then passed through mixing services, which blend multiple users' coins together to confuse the transaction trail. In 2022, Bitcoin mixers processed over $7.8 billion in illicit transactions, according to data cited by zondacrypto . While some mixing services claim to serve privacy-conscious users with legitimate reasons, many are directly linked to money laundering operations and sanctioned entities. For instance, in 2022, the US Department of the Treasury sanctioned Tornado Cash, a major Ethereum-based mixer, for facilitating the laundering of over $1 billion, including funds linked to the Lazarus Group. Efforts to regulate or shut down mixing services have faced legal and technical challenges, as these platforms often operate in decentralised or jurisdictionally complex environments. Nonetheless, they remain a primary method for criminals seeking to sever the link between stolen or illicitly obtained funds and their eventual cash-out points.

The Future: Regulation vs. Innovation

The future trajectory of cryptocurrency’s role in organised crime hinges on a delicate balance between regulatory control and technological innovation. As illicit actors exploit decentralised financial ecosystems, governments and private sector stakeholders must respond with coordinated strategies that do not stifle legitimate innovation. This ongoing tension between enforcement and advancement will define how effectively the crypto landscape can be safeguarded against abuse.

Regulatory coordination will be a determining factor in the success of global anti-financial crime efforts within the cryptocurrency sector. Bodies such as the Financial Action Task Force (FATF) are spearheading the harmonisation of crypto regulation through initiatives like Recommendation 16, commonly referred to as the Travel Rule. This rule mandates that virtual asset service providers (VASPs) share key identifying information about the originators and beneficiaries of crypto transactions. While adoption has been uneven across jurisdictions, efforts to close regulatory gaps are gaining momentum, especially as criminal networks increasingly exploit regulatory arbitrage. A globally coordinated approach will be essential to prevent illicit funds from flowing through weak links in the system.

Technological advancements are also reshaping how financial crime is detected and disrupted in the digital asset space. Companies like Chainalysis and TRM Labs  are developing cutting-edge blockchain analytics tools that can de-anonymise transactions, even across privacy-enhancing cryptocurrencies and decentralised finance (DeFi) platforms. These tools use advanced heuristics, machine learning, and data visualisation to trace the movement of funds, identify suspicious patterns, and support law enforcement investigations. As these solutions continue to evolve, they will provide critical intelligence in the fight against crypto-enabled crime, although they must keep pace with rapidly changing technologies and adversarial tactics.

The rise of Central Bank Digital Currencies (CBDCs) may also influence the criminal use of cryptocurrencies. CBDCs, such as China’s digital yuan, offer state-backed, traceable digital payments that could present a more transparent alternative to conventional cryptocurrencies. While CBDCs are not inherently designed to combat crime, their integration into financial systems may reduce the relative appeal of anonymous or decentralised crypto-assets for illicit purposes. However, privacy concerns and geopolitical tensions could complicate their adoption and effectiveness, particularly in jurisdictions with differing views on surveillance and personal financial freedom.

Conclusion: Adaptation Over Abandonment

While the heyday of unregulated crypto criminality may be waning, cryptocurrency is still very much in use by organised crime groups. The difference lies in the complexity of their methods. As traditional laundering routes are disrupted by regulation and transparency, criminals are innovating with privacy-focused assets, decentralised platforms, and advanced obfuscation techniques.

The battle is no longer just about regulation, it is about technological parity. To keep pace, law enforcement and regulators must continue to invest in blockchain analytics, cross-border collaboration, and proactive monitoring of emerging crypto technologies. The digital arms race between illicit finance and financial crime prevention is far from over.