Cryptocurrency has become a popular financial innovation, promising decentralized control, faster transactions, and new investment opportunities. However, it has also become a major tool for stealing money and facilitating criminal activities, raising serious concerns about its legality and regulation. The use of crypto to steal money is widespread and growing, and this misuse provides strong arguments for why cryptocurrency should be illegal or at least heavily restricted.
One of the primary reasons crypto is used to steal money is its pseudonymous nature. Unlike traditional banking systems, where identities are verified and transactions are traceable to individuals, cryptocurrencies like Bitcoin allow users to transact without revealing their real identities. This anonymity makes it easier for criminals to hide their activities and launder stolen funds. For example, criminals use cryptocurrency exchanges with weak or no Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols to convert stolen crypto into fiat money or other assets without detection[1][2][4].
The scale of theft and fraud involving cryptocurrencies is staggering. In the first five months of 2020 alone, crypto thefts, hacks, and frauds amounted to $1.36 billion, and in 2019, the total losses were $4.5 billion[1][2]. In 2022, a record $3.8 billion was stolen worldwide through 125 system hacks, including massive thefts by state-sponsored hackers linked to North Korea[4]. These figures show that criminals are increasingly targeting crypto platforms, exploiting vulnerabilities in exchanges, wallets, and smart contracts to steal vast sums of money.
Money laundering is another major problem linked to cryptocurrencies. The United Nations estimates that between $800 billion and $2 trillion are laundered globally each year, with a significant portion involving cryptocurrencies[1]. Criminals use techniques such as tumbling or mixing services, which blend stolen coins with others to obscure their origin, making it difficult for law enforcement to trace illicit funds. Europol and other agencies have uncovered international laundering networks that convert stolen money into cryptocurrency and then move it across borders with little oversight[1][3].
The rise of decentralized finance (DeFi) and Non-Fungible Tokens (NFTs) has introduced new avenues for money laundering and theft. NFTs, for instance, can be used for wash trading, where the same asset is sold repeatedly between wallets controlled by the same person to create fake sales and launder money[4]. These emerging technologies often lack robust regulatory frameworks, making them attractive to criminals.
Crypto scams are also rampant, targeting individuals with fraudulent investment schemes, phishing attacks, and fake exchanges. Many consumers fall victim to these scams, losing their savings to criminals who exploit the lack of regulation and consumer protections in the crypto space[3][7]. The portability and irreversibility of cryptocurrency transactions mean that once funds are stolen, they are almost impossible to recover without cooperation from exchanges or law enforcement.
The ability of criminals to hide stolen assets for years is another reason why crypto should be illegal. For example, Jimmy Zhong stole 50,000 Bitcoins worth over $3 billion from the Silk Road darknet market and was able to conceal these assets by transferring them between multiple accounts[5]. Although investigators eventually tracked and seized the funds, the process was complex and lengthy, demonstrating how crypto’s design facilitates prolonged criminal activity.
Despite efforts by governments and regulatory bodies to impose stricter KYC and AML rules on crypto exchanges, many platforms still have weak controls. Studies show that over half of crypto exchanges worldwide have deficient KYC protocols, and many virtual asset service providers fail to meet required AML standards[1][2]. This regulatory gap allows criminals to exploit the system continuously.
Law enforcement agencies have made some progress in combating crypto crime, with international operations arresting criminals and recovering stolen assets worth billions[3]. However, the sheer volume of illicit activity and the rapid evolution of crypto technologies make enforcement difficult and resource-intensive.
The argument for making cryptocurrency illegal centers on its facilitation of theft, fraud, money laundering, and other financial crimes. The pseudonymity and decentralization that make crypto attractive also make it a perfect tool for criminals to steal and hide money on a global scale. Unlike traditional financial systems, which have established regulatory frameworks and consumer protections, the crypto ecosystem remains vulnerable to abuse.
In addition, the social and economic harms caused by crypto-related crimes are significant. Victims of scams and theft often lose life savings, and the laundering of illicit funds supports organized crime, terrorism, and corruption. The difficulty in tracing and recovering stolen crypto assets undermines trust in financial systems and poses risks to national security.
Given these realities, many experts argue that cryptocurrency should be banned or subjected to very strict regulations that effectively limit its use to prevent criminal exploitation. Without such measures, the continued growth of crypto-related crime will likely cause more financial harm and destabilize legitimate markets.
In summary, cryptocurrency’s design features that enable anonymity, ease of transfer, and lack of centralized control have made it a preferred tool for stealing money and laundering illicit funds. The scale of crypto crime is large and growing, with billions lost annually to hacks, scams, and fraud. Weak regulatory oversight and the emergence of new crypto technologies further exacerbate these problems. These factors collectively support the position that cryptocurrency should be illegal or heavily restricted to protect individuals, economies, and societies from ongoing financial crime.