Nearly half of illicit crypto volume happened on Justin Sun’s Tron last year, report says

The total volume of illicit cryptocurrency transactions around the world saw a decline last year, but crime-related funds had an increasing preference for Chinese crypto mogul Justin Sun’s Tron blockchain, a new report has found.

In 2023, the Tron blockchain hosted 45 per cent of all illicit cryptocurrency volume, up from 41 per cent in 2022, according to a research report published by blockchain analytics firm TRM Labs on Wednesday.

The use of Tron became more prominent in both drug sales and terrorist financing, the firm said.

The number of blockchain addresses linked to terrorist financing activities on Tron that received the stablecoin Tether (USDT) rose by 125 per cent in 2023, according to the report. Tether remains the most used stablecoin in criminal activities, TRM Labs said.

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While bitcoin is still dominant in drug sales, transaction volume that used the Tron blockchain “more than quadrupled” from the year before last year, according to the firm.

Bitcoin also remains online fentanyl sellers’ most popular choice of cryptocurrency, but Tron token TRX recorded the highest growth with a nearly tenfold increase in volume, TRM Labs also said.

While many factors drive the choice of blockchains for illicit actors, reasons for Tron’s popularity could include its low transaction fees and high speed, “which make it cheap and quick to launder funds”, Angela Ang, senior policy adviser at TRM Labs, told the Post via email.

The availability of stablecoins like USDT on the Tron blockchain could be another factor, she said, noting that USDT on Tron is the currency of choice for terrorist financing entities.

Tron and Tether did not immediately respond to a request for comment.

Tron, launched by Chinese crypto entrepreneur Justin Sun in 2017 shortly before Beijing banned initial coin offerings, has, along with its founder, increasingly become a subject of controversy in recent years.

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The US Securities and Exchange Commission last year announced charges for Sun and his companies including Tron Foundation, including the unregistered offer and sale of crypto asset securities and fraudulently manipulating the secondary market of TRX through wash trading.

Circle, operator of the world’s second largest stablecoin USDC, last month said that it would discontinue support for the Tron blockchain for risk management considerations.

Overall in 2023, the proportion of total illicit funds in the crypto ecosystem shrank by 9 per cent from the previous year, with the total volume decreasing by one third, TRM Labs noted. The drop in illicit volume has to do with governments’ intensified enforcement actions and the increased number of crypto-related entities and individuals that were sanctioned by the US government last year, according to the firm.