The year 2024 marked a significant turning point for the Web3 industry, particularly in the realm of online gambling, a recent report by Bitrace highlights.
As the market capitalization of crypto assets soared and infrastructure adoption reached unprecedented levels, the online gambling sector thrived alongside it. However, this growth also saw an alarming rise in the use of cryptocurrencies by criminal enterprises, leveraging the same infrastructures that support legitimate online gambling.
The report from Bitrace shows troubling statistics regarding crypto-related crimes. Notably, stablecoin inflows to high-risk addresses—defined as blockchain wallets associated with illegal activities—totaled approximately $649 billion in 2024, reflecting a slight increase from the previous year.
These high-risk addresses, primarily found on Ethereum and TRON networks, underscore the vulnerabilities in the crypto ecosystem.
While the proportion of high-risk activities in total stablecoin transactions decreased to 5.14 percent from 5.94 percent, this rate remains significantly higher than in 2021 and 2022, indicating a persistent issue.
Online gambling growth
Amidst these challenges, online gambling has continued to expand. In 2024, online gambling platforms and associated payment processors managed transactions totaling $217.8 billion, an increase of over 17.5 percent from 2023. This growth reflects the increasing acceptance of cryptocurrencies within the gambling sector, with USDC’s share of stablecoin transactions rising dramatically to 13.36 percent, up from 5.22 percent in the previous year.
Despite the positive developments in online gambling, the black and gray markets remain robust. In 2024, blockchain addresses linked to illicit trade received over $278.1 billion, indicating a slight rise from the previous year.
The proliferation of escrow services like Huione Guarantee has facilitated these transactions, further entrenching illicit activities within the crypto landscape.
The report also reveals a staggering increase in crypto fraud, with stablecoin inflows to fraudulent addresses reaching $52.5 billion in 2024, surpassing the total of previous years combined. This surge may reflect improved detection capabilities and the increasing sophistication of fraud tactics, as more cases come to light.
Regulatory responses and compliance
Despite the challenges posed by crypto crime, regulatory measures have begun to take effect.
In 2024, stablecoin issuers like Tether and Circle froze over $1.3 billion in assets linked to illicit activities, a significant increase compared to previous years. Moreover, the US Office of Foreign Assets Control (OFAC) and Israel’s National Bureau for Counter-Terror Financing (NBCTF) have intensified efforts against terrorist financing, although the inherent anonymity of crypto continues to pose challenges.
Hong Kong was said to serve as a model for effective regulation, demonstrating that clear legal frameworks and compliance measures can enhance market stability and trust. Following the implementation of these policies, the proportion of high-risk funds in stablecoin inflows within Hong Kong dropped sharply, indicating a successful crackdown on illicit activities.
Still, the report warns that the online gambling sector continues to capitalize on the growth of cryptocurrencies, while crypto crime remains a pressing concern, with regulatory frameworks and compliance measures essential in curbing illicit activities, creating a safer environment for both operators and consumers.
