Nasdaq report reveals over $3 trillion in illegal flows from 2023, omits mention of crypto

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Over $3 trillion in illicit funds flowed through the global financial system in 2023, enabling crimes like drug and human trafficking and terrorist financing on a massive scale, according to a new Nasdaq report.

The “Global Financial Crime Report” estimated that $782.9 billion supported drug trafficking, $346.7 billion was linked to human trafficking, and another $11.5 billion financed terrorist activities. Beyond this, $485.6 billion was connected to fraud.

“[Financial institutions] have been at the forefront of this issue for decades,” said Nasdaq CEO Adena Friedman. 

Friedman noted that institutions are under pressure to curb illicit financial flows but stressed that no single company can address this alone.

Notably, the report did not mention cryptocurrencies like Bitcoin or stablecoins as conduits for these illicit funds. VanEck Digital Asset Strategies Director Gabor Gurbacs suggests that this omission implicates the mainstream financial system in enabling these crimes.

Tether CEO Paolo Ardoino called the scale of financial crime “incredibly alarming” and said that “[only] through multilateral cooperation will we succeed in stopping these illicit activities.” Ardoino notes that Tether has worked with law enforcement to freeze addresses used for illegal transactions and urged legacy institutions to follow their example.

Tether was singled out by a UN report saying that its USDT stablecoin is the most used cryptocurrency among illegal casinos and other organized crime entities across East and Southeast Asia.

In a recent crypto crime report by Chainalysis, a similar trajectory can be seen: the report also did not implicate cryptocurrencies in general for most illicit transactions. Instead, criminals utilize stablecoins primarily to cash out into fiat currency through exchanges. Chainalysis states that $24.2 billion was used in these transactions, a “significant drop in value” used by illicit cryptocurrency addresses.

Blockchain transparency often hinders the concealment of outright criminal activity, except if done through crypto mixers such as Tornado Cash and similar projects, though these are not wholly immutable or untraceable.

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