Seth Hertlein, the Global Head of Policy at Ledger, a Paris-based digital asset wallet provider, has countered the widespread public belief that cryptocurrency is a common tool for criminals. According to Hertlein, illicit activity is more prevalent in the traditional financial system. His comments were featured in the Cap Hill Crypto newsletter’s January 5 edition.
“Criminal activity involving crypto is orders of magnitude smaller, both on an aggregate and a percentage basis, than the amount of criminal proceeds moved through the traditional financial system in fiat currencies,” Hertlein said. “When criminal proceeds are moved through crypto, seizure and recovery rates are far higher than in the traditional context. Turns out it’s not easy to hide on an immutable public ledger. Contrary to the common misconception, crypto’s relative lack of use in crime is a success story!”
Chainalysis, a blockchain analytics company, released a report indicating that only 0.15% of total crypto transactions in 2021 were linked to illicit wallet addresses. The report suggests that “The yearly trends suggest that with the exception of 2019 — an extreme outlier year for cryptocurrency-based crime largely due to the PlusToken Ponzi scheme — crime is becoming a smaller and smaller part of the cryptocurrency ecosystem.” Chainalysis attributes this trend to the transparency provided by blockchain technology, which allows analysts to trace illicit funds more easily.
In its report titled “National Strategy for Combating Terrorist and Other Illicit Financing”, the U.S. Treasury Department found that most terrorist organizations primarily rely on traditional financial systems and cash for fund transfers.
The United Nations Office on Drugs and Crime reported that an estimated 2-5% of global GDP or between $800 billion and $2 trillion USD is laundered annually. However, due to money laundering’s clandestine nature, it remains challenging to estimate the total amount laundered.
Dr. Andrzej Gwizdalski from the University of Western Australia analyzed data from the United Nations, World Economic Forum, and Chainalysis. He found that “Traditional fiat, like the USD, is implicated in an estimated $3.2 trillion in illegal activities annually—over 100 times the $20 billion linked to cryptocurrencies,” according to a post from Oodaloop. Gwizdalski also warned that “Using crypto for illegal purposes is inherently risky and plainly unwise with every transaction transparently recorded.”
Before joining Ledger, Hertlein served as Head of Policy and Government Relations for the Stellar Development Foundation, where he oversaw global engagement on crypto policy and regulation. This information was shared in a press release by the PA Blockchain Coalition (PBC). Hertlein is also a member of the Blockchain Association and has previously served on the leadership committee of the Chamber of Digital Commerce’s Token Alliance. In May 2022, he was appointed as Advisory Board Chair for PBC.
