Cryptocurrencies, Blockchain, and Financial Crimes
DOI:
https://doi.org/10.6000/1929-4409.2025.14.08Keywords:
Cryptocurrencies, blockchain, financial crimes, money laundering, fraud, regulationAbstract
Cryptocurrencies and blockchain technology have revolutionized the financial sector, offering decentralized, secure, and efficient transaction mechanisms. However, these innovations have also introduced new challenges, particularly in the realm of financial crimes such as money laundering, illicit trade, and fraud. This paper explores the dual-use nature of cryptocurrencies, examining their potential for both financial innovation and criminal exploitation, with over $20 billion in illicit transactions recorded in 2023 (Chainalysis, 2023). By reviewing case studies, regulatory responses, and technological solutions, this paper provides a comprehensive analysis of the risks and opportunities presented by cryptocurrencies and blockchain technology. Current regulatory frameworks, such as the EU’s MiCA Regulation (2023) and FATF recommendations and guidelines, have significantly influenced cryptocurrency adoption by balancing innovation with risk mitigation. The paper concludes with actionable recommendations for enhancing regulatory frameworks, fostering international cooperation, leveraging AI and other technological advancements, and creating educational initiatives to mitigate financial crimes in the digital age.
References
Agarwal, U., Rishiwal, V., Tanwar, S., & Yadav, M. (2023). Blockchain and crypto forensics: investigating crypto frauds. International Journal of Network Management, 34(2). DOI: https://doi.org/10.1002/nem.2255
Aldridge, J., & Décary-Hétu, D. (2014). Not an 'eBay for drugs': The cryptomarket 'Silk Road' as a paradigm shifting criminal innovation. British Journal of Criminology, 54(4), 680-703. DOI: https://doi.org/10.2139/ssrn.2436643
Alekseenko, A. P. (2023). Model framework for consumer protection and crypto-exchanges regulation. Journal of Risk and Financial Management, 16(7), 305. DOI: https://doi.org/10.3390/jrfm16070305
Allen, C. (2021). Interoperable Identity Frameworks: Strengthening KYC Processes Across Jurisdictions. Journal of Digital Identity, 12(3), 45-60.
Al-Tawil, T. N. (2022). Anti-money laundering regulation of cryptocurrency: uae and global approaches. Journal of Money Laundering Control, 26(6), 1150-1164. DOI: https://doi.org/10.1108/JMLC-07-2022-0109
Almaqableh, L., Wallace, D., Pereira, V., Ramiah, V., Wood, G., Veron, J. F., … & Watson, A. (2023). Is it possible to establish the link between drug busts and the cryptocurrency market? yes, we can. International Journal of Information Management, 71, 102488. DOI: https://doi.org/10.1016/j.ijinfomgt.2022.102488
Alotibi, J., Almutanni, B., Alsubait, T., Alhakami, H., & Baz, A. (2022). Money laundering detection using machine learning and deep learning. International Journal of Advanced Computer Science and Applications, 13(10). DOI: https://doi.org/10.14569/IJACSA.2022.0131087
Andoni, M., Robu, V., Flynn, D., Abram, S., Geach, D., Jenkins, D., ... & Peacock, A. (2019). Blockchain Technology in the Energy Sector: A Systematic Review of Challenges and Opportunities. Renewable and Sustainable Energy Reviews, 100, 143-174. DOI: https://doi.org/10.1016/j.rser.2018.10.014
Antonopoulos, A. M. (2014). Mastering Bitcoin: Unlocking Digital Cryptocurrencies. O'Reilly Media.
Bartoletti, M., Lande, S., Loddo, A., Pompianu, L., & Serusi, S. (2021). Cryptocurrency scams: analysis and perspectives. IEEE Access, 9, 148353-148373. DOI: https://doi.org/10.1109/ACCESS.2021.3123894
Bhatnagar, M., Taneja, S., & Rupeika-Apoga, R. (2023). Demystifying the effect of the news (shocks) on crypto market volatility. Journal of Risk and Financial Management, 16(2), 136. DOI: https://doi.org/10.3390/jrfm16020136
Böhme, R., Christin, N., Edelman, B., & Moore, T. (2015). Bitcoin: Economics, technology, and governance. Journal of Economic Perspectives, 29(2), 213-238. DOI: https://doi.org/10.1257/jep.29.2.213
Brenig, C., Accorsi, R., & Mueller, G. (2019). Real-Time Monitoring of Blockchain Transactions Using AI Algorithms. Journal of Financial Technology, 8(2), 123-140
Bromberg, L., Godwin, A., & Ramsay, I. (2020). Public-Private Partnerships in Financial Regulation: Enhancing Collaboration for Cryptocurrency Oversight. Journal of Financial Regulation, 6(1), 78-95.
Brooks, R. (2021). Privacy Coins and Regulatory Challenges: A Framework for Balancing Privacy and Transparency. Journal of Financial Regulation and Compliance, 29(3), 345-360.
Buterin, V. (2013). Ethereum Whitepaper: A Next-Generation Smart Contract and Decentralized Application Platform. Ethereum Whitepaper.
Catalini, C., & Gans, J. S. (2016). Some Simple Economics of the Blockchain. MIT Sloan Research Paper, 5191-1. DOI: https://doi.org/10.3386/w22952
Campbell-Verduyn, M. (2018). Bitcoin and Beyond: Cryptocurrencies, Blockchain, and Global Governance. Routledge. DOI: https://doi.org/10.4324/9781315211909
Chainalysis. (2023). The 2023 Crypto Crime Report. Retrieved from https://www.chainalysis.com
Chainalysis. (2024). The 2024 Crypto Crime Report. Retrieved from https://www.chainalysis.com
Chainalysis (2025). Crypto Crime Report: The rising role of cryptocurrency in all forms of crime and how its transparency is creating unique opportunities for investigation. Retrieved from: https://www.chainalysis.com/wp-content/uploads/2025/ 03/the-2025-crypto-crime-report-release.pdf
Childs, A. (2024). ‘I guess that’s the price of decentralisation… ’: Understanding scam victimisation experiences in an online cryptocurrency community. International Review of Victimology, 30(3), 539-555. DOI: https://doi.org/10.1177/02697580231215840
Christin, N. (2013). Traveling the Silk Road: A Measurement Analysis of a Large Anonymous Online Marketplace. Proceedings of the 22nd International Conference on World Wide Web. DOI: https://doi.org/10.1145/2488388.2488408
Cornerstone Research. (2024). SEC Cryptocurrency Enforcement 2024 Update. Retrieved from https://www.cornerstone.com/ wp-content/uploads/2025/01/SEC-Cryptocurrency-Enforcement-2024-Update.pdf
Das, B. N., Sarker, B. C., Saha, A., Bishnu, K. K., Das, B., Sartaz, M. S., … & Khan, M. A. (2025). Detecting cryptocurrency scams in the USA: a machine learning-based analysis of scam patterns and behaviors. Journal of Ecohumanism, 4(2). DOI: https://doi.org/10.62754/joe.v4i2.6604
Dolliver, D., & Love, K. (2015). Criminogenic Asymmetries in Cyberspace: A Comparative Analysis of Two Tor Marketplaces. Journal of Globalization Studies, 5(2), 75–96.
Dowling, M. (2021). Is Non-Fungible Token Pricing Driven by Cryptocurrencies? Finance Research Letters, 102097. DOI: https://doi.org/10.1016/j.frl.2021.102097
Easley, D., O'Hara, M., & Basu, S. (2019). From Mining to Markets: The Evolution of Bitcoin Transaction Fees. Journal of Financial Economics, 134(1), 91-109. DOI: https://doi.org/10.1016/j.jfineco.2019.03.004
Ekblaw, A., Azaria, A., Halamka, J. D., & Lippman, A. (2016). A Case Study for Blockchain in Healthcare: "MedRec" Prototype for Electronic Health Records and Medical Research Data. MIT Media Lab.
European Commission. (2020). Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. Official Journal of the European Union. Retrieved from https://eur-lex.europa.eu
European Parliament and Council. (2023) Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets. Official Journal of the European Union. Retrieved from https://eur-lex.europa. eu/legal-content/EN/TXT/?uri=celex%3A32023R1114
Europol. (2019). Internet Organised Crime Threat Assessment (IOCTA) 2019. Europol. DOI: https://doi.org/10.1016/S1361-3723(19)30114-9
Europol. (2021). Joint Task Forces and Cryptocurrency Crime: Enhancing Investigative Efforts. Europol.
Europol. (2025) The Changing DNA of Serious and Organised Crime. Europol.
Fanusie, Y. J., & Robinson, T. (2018). Bitcoin laundering: An analysis of illicit flows into digital currency services. Center on Sanctions and Illicit Finance.
FATF (2019) Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (VASPs), FATF, Paris.
FATF (2020), Money Laundering and Terrorist Financing Red Flag Indicators Associated with Virtual Assets, FATF, Paris.
FATF, Paris FATF (2021), Updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers, FATF, Paris.
FATF (2024), Targeted Update on Implementation of the FATF Standards on Virtual Assets/VASPs, FATF, Paris.
FBI. (2023). Cryptocurrency Fraud Report. FBI: Internet Crime Complaint Center.
Financial Services Agency of Japan. (2021). Amendment of the Payment Services Act and the Act on Prevention of Transfer of Criminal Proceeds. Retrieved from https://www.fsa.go.jp
FINRA. (2021). Fraud Prevention Resources for Cryptocurrency Users. Retrieved from https://www.finra.org
Foley, S., Karlsen, J. R., & Putniņš, T. J. (2019). Sex, drugs, and bitcoin: How much illegal activity is financed through cryptocurrencies? Review of Financial Studies, 32(5), 1798-1853. DOI: https://doi.org/10.1093/rfs/hhz015
Gensler, G. (2022). Remarks Before the Aspen Security Forum. U.S. Securities and Exchange Commission. Retrieved from https://www.sec.gov
Gervais, A., Karame, G. O., & Capkun, S. (2016). On the Privacy Provisions of Bloom Filters in Lightweight Bitcoin Clients. IEEE Security & Privacy.
Gokal, R., & Yakovenko, A. (2020). Solana: Scaling Blockchain for Global Adoption. Solana Research Papers
Hertig, A. (2018). Ethereum’s Transition to Proof of Stake: Challenges and Benefits. Blockchain Research Institute.
Huey, Y. C., Angeline, Y. K. H., Teng, Y. S., Melissa, T. T. T., Chin, W. S., & Saleh, Z. (2024). Text analytics on regulation of cryptocurrency. KnE Social Sciences. DOI: https://doi.org/10.18502/kss.v9i14.16140
Holt, T. J., Lee, J. R., & Griffith, E. M. (2023). An assessment of cryptomixing services in online illicit markets. Journal of Contemporary Criminal Justice, 39(2), 222-238. DOI: https://doi.org/10.1177/10439862231158004
Hoskinson, C. (2017). Cardano Whitepaper: A Decentralized Public Blockchain and Cryptocurrency Project. IOHK
Hughes, S. (2020). Self-Regulation in the Cryptocurrency Industry: Developing a Code of Conduct. Journal of Financial Compliance, 4(2), 112-130.
Hvidson, K. (2022). The influence of cryptocurrency on international relations and sanctions. Journal of Global Economy, Business and Finance, 4(2). DOI: https://doi.org/10.53469/jgebf.2022.04(02).10
İli, B. (2025). Analysis of complaints regarding cryptocurrency investment fraud: an evaluation from the perspective of new media literacy. Iğdır Üniversitesi Sosyal Bilimler Dergisi, (38), 214-229. DOI: https://doi.org/10.54600/igdirsosbilder.1580718
IRS. (2021). Virtual currency guidance. Internal Revenue Service. Retrieved from https://www.irs.gov/individuals/international-taxpayers/virtual-currency-guidance
IMF. (2021). Professional Training Programs for Cryptocurrency Regulation. Washington DC: IMF.
IOSCO. (2021). Technical Standards for Blockchain and Cryptocurrency Systems. Retrieved from https://www.iosco.or
Islam, I., & Islam, M. N. (2024). A blockchain based medicine production and distribution framework to prevent medicine counterfeit. Journal of King Saud University - Computer and Information Sciences, 36(1), 101851. DOI: https://doi.org/10.1016/j.jksuci.2023.101851
Jamil, F., Hang, L., Kim, K., & Kim, D. (2019). A Novel Medical Blockchain Model for Drug Supply Chain Integrity Management in a Smart Hospital. Electronics, 8(5), 505. DOI: https://doi.org/10.3390/electronics8050505
Japinye, A. (2024). Integrating machine learning in anti-money laundering through crypto: a comprehensive performance review. European Journal of Accounting Auditing and Finance Research, 12(4), 54-80. DOI: https://doi.org/10.37745/ejaafr.2013/vol12n45480
Kshetri, N. (2017). Blockchain's Roles in Strengthening Cybersecurity and Protecting Privacy. Telecommunications Policy, 41(10), 1027-1038. DOI: https://doi.org/10.1016/j.telpol.2017.09.003
Kshetri, N. (2018). Blockchain's Roles in Meeting Key Supply Chain Management Objectives. International Journal of Information Management, 39, 80-89. DOI: https://doi.org/10.1016/j.ijinfomgt.2017.12.005
Lee, C. (2011). Litecoin: An Open Source P2P Digital Currency. Litecoin Whitepaper.
Leuprecht, C., Jenkins, C., & Hamilton, R. (2022). Virtual money laundering: policy implications of the proliferation in the illicit use of cryptocurrency. Journal of Financial Crime, 30(4), 1036-1054. DOI: https://doi.org/10.1108/JFC-07-2022-0161
Mengelkamp, E., Gärttner, J., Rock, K., Kessler, S., Orsini, L., & Weinhardt, C. (2018). Designing Microgrid Energy Markets: A Case Study. The Brooklyn Microgrid. Applied Energy, 210, 870-880. DOI: https://doi.org/10.1016/j.apenergy.2017.06.054
MIT Media Lab. (2021). Academic Programs in Blockchain Technology and Cryptocurrency Regulation. Cambridge, MA: MIT.
Mougayar, W. (2016). The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology. Wiley.
Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. White Paper.
Narayanan, A., Bonneau, J., Felten, E., Miller, A., & Goldfeder, S. (2016). Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction. Princeton University Press
Nicholls, J., Kuppa, A., & Le-Khac, N.-A. (2021). Financial Cybercrime: A Comprehensive Survey of Deep Learning Approaches to Tackle the Evolving Financial Crime Landscape. IEEE Access, 9, 163965–163986. DOI: https://doi.org/10.1109/ACCESS.2021.3134076
NSF. (2021). Funding for Research on Cryptocurrency Trends and Risks. Washington, DC: NSF.
OECD. (2021). Independent Certification Programs for Cryptocurrency Platforms. Paris: OECD.
Ølnes, S., Ubacht, J., & Janssen, M. (2017). Blockchain in Government: Benefits and Implications of Distributed Ledger Technology for Information Sharing. Government Information Quarterly, 34(3), 355-364. DOI: https://doi.org/10.1016/j.giq.2017.09.007
Passas, N. (1999). Globalization, Criminogenic Asymmetries and Economic Crime. European Journal of Law Reform, 1(4), 399-423.
Passas, N. (2018a). Report on the debate regarding EU cash payment limitations. Journal of Financial Crime, 25(1), 5-27. DOI: https://doi.org/10.1108/JFC-06-2017-0058
Passas, N. (2018b). Cash, Crime and Common Sense: Effective and Non-effective Ways of Tackling Illicit Financial Flows. In I. Gloerich, J. Hart, G. Lovink, C. Nevejan, & I. Verkerk (Eds.), Flying Money 2018: Investigating Illicit Financial Flows in the City (pp. 70-84). Amsterdam: Amsterdam University of Applied Sciences and City of Amsterdam.
People’s Bank of China. (2021). Notice on Further Preventing and Disposing of the Risks of Virtual Currency Trading and Speculation. Retrieved from http://www.pbc.gov.cn
Philippon, T. (2020). On Fintech and Financial Inclusion. Journal of Financial Economics, 137(2), 234-251.
Ramanathan, V., Tripathi, S., Bhattacharya, S., & Varshney, S. (2023). Public health perspectives on cryptocurrency: the good, the bad and the ugly. Indian Journal of Community Health, 35(3), 372-374. DOI: https://doi.org/10.47203/IJCH.2023.v35i03.023
Rueckert, C. (2019). Cryptocurrencies and fundamental rights. Journal of Cybersecurity, 5(1), tyz004. DOI: https://doi.org/10.1093/cybsec/tyz004
Saberi, S., Kouhizadeh, M., Sarkis, J., & Shen, L. (2019). Blockchain Technology and Its Relationships to Sustainable Supply Chain Management. International Journal of Production Research, 57(7), 2117-2135. DOI: https://doi.org/10.1080/00207543.2018.1533261
Saha, S., Hasan, A. R., Mahmud, A., Ahmed, N., Parvin, N., & Karmakar, H. (2024). Cryptocurrency and financial crimes: a bibliometric analysis and future research agenda. Multidisciplinary Reviews, 7(8), 2024168. DOI: https://doi.org/10.31893/multirev.2024168
Schaupp, L. C., & Festa, M. (2018). Blockchain-Based Reporting Systems for Regulatory Compliance. Journal of Information Systems, 32(3), 45-60.
Schwartz, D., Youngs, N., & Britto, A. (2014). The Ripple Protocol Consensus Algorithm. Ripple Labs Inc.
Singer, D., Demirguc-Kunt, A., Klapper, L., & Singer, D. (2017). Financial Inclusion and Inclusive Growth: A Review of Recent Empirical Evidence. World Bank, Washington, DC. DOI: https://doi.org/10.1596/1813-9450-8040
Tapscott, D., & Tapscott, A. (2016). Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World. Penguin.
Trozze, A., Kamps, J., Akartuna, E. A., Hetzel, F. J., Kleinberg, B., Davies, T., & Johnson, S. D. (2022). Cryptocurrencies and future financial crime. Crime Science, 11(1), 1. DOI: https://doi.org/10.1186/s40163-021-00163-8
Truong, V. T., Le, L. B., & Niyato, D. (2023). Blockchain meets metaverse and digital asset management: a comprehensive survey. IEEE Access, 11, 26258-26288. DOI: https://doi.org/10.1109/ACCESS.2023.3257029
Tschorsch, F., & Scheuermann, B. (2016). Bitcoin and Beyond: A Technical Survey on Decentralized Digital Currencies. IEEE Communications Surveys & Tutorials, 18(3), 2084-2123. DOI: https://doi.org/10.1109/COMST.2016.2535718
UNODC. (2022). International Cooperation to Combat Cryptocurrency-Related Financial Crimes. Vienna, UNODC.
U.S. Commodity Futures Trading Commission (CFTC). (2022). CFTC Backgrounder on Crypto-Assets. Retrieved from https://www.cftc.gov
U.S. Financial Crimes Enforcement Network (FINCEN). (2021). FinCEN Guidance on Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies. Retrieved from https://www.fincen.gov
U.S. Securities and Exchange Commission (SEC). (2021). Framework for “Investment Contract” Analysis of Digital Assets. Retrieved from https://www.sec.gov
Vasek, M., & Moore, T. (2015). There’s No Free Lunch, Even Using Bitcoin: Tracking the Popularity and Profits of Virtual Currency Scams. In R. Böhme & T. Okamoto (Eds.), Financial Cryptography and Data Security (Vol. 8975, pp. 44–61). Springer Berlin Heidelberg. DOI: https://doi.org/10.1007/978-3-662-47854-7_4
Wang, G., Zhang, S., Yu, T., & Ning, Y. (2021). A Systematic Overview of Blockchain Research. Journal of Systems Science and Information, 9(3), 205–238. DOI: https://doi.org/10.21078/JSSI-2021-205-34
Weber, R. H., Staub, S., & Hardy, R. (2019). Blockchain technology and digital trade: Challenges and opportunities. Journal of International Economic Law, 22(2), 237-259.
Werbach, K. (2018). The Blockchain and the New Architecture of Trust. MIT Press DOI: https://doi.org/10.7551/mitpress/11449.001.0001
Werbach, K., & Cornell, N. (2017). Contracts Ex Machina: How Smart Contracts Automate Compliance. Duke Law Journal, 67(2), 313-350
World Bank. (2020). Public Awareness Campaigns on Cryptocurrency Risks and Benefits. Washington DC: World Bank.
Yue, X., Wang, H., Jin, D., Li, M., & Jiang, W. (2016). Healthcare Data Gateways: Found Healthcare Intelligence on Blockchain with Novel Privacy Risk Control. Journal of Medical Systems, 40(10), 218. DOI: https://doi.org/10.1007/s10916-016-0574-6
Zhao, J. L., & O'Mahony, D. (2018). Decentralized Identity Solutions for Secure Digital Credentials. Journal of Cybersecurity, 4(1), 1-15.
Zetzsche, D. A., Buckley, R. P., Arner, D. W., & Föhr, L. (2017). The ICO Gold Rush: It's a Scam, It's a Bubble, It's a Super Challenge for Regulators. University of Luxembourg Law Working Paper. DOI: https://doi.org/10.2139/ssrn.3072298
Zetzsche, D. A., Buckley, R. P., & Arner, D. W. (2020). From FinTech to TechFin: The Regulatory Challenges of Data-Driven Finance. New York University Journal of Law & Business, 14(2), 393-446.
Zhao, C. (2017). Binance Whitepaper: Building the Crypto Ecosystem. Binance
Zohar, A. (2015). Bitcoin: Under the hood. Communications of the ACM, 58(9), 104-113. DOI: https://doi.org/10.1145/2701411
Downloads
Published
How to Cite
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Policy for Journals/Articles with Open Access
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are permitted and encouraged to post links to their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work
Policy for Journals / Manuscript with Paid Access
Authors who publish with this journal agree to the following terms:
- Publisher retain copyright .
- Authors are permitted and encouraged to post links to their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work .
