Online Gambling Thrives Amid Rising Crypto Crime in 2024: A Growing Concern

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The year 2024 marked a crucial turning point for the Web3 industry, especially in the realm of online gambling. According to a recent report by Bitrace, the sector experienced significant growth, fueled by the soaring market capitalization of crypto assets and widespread adoption of crypto infrastructure. However, this expansion also saw a troubling increase in the use of cryptocurrencies by criminal enterprises, exploiting the very systems that support legitimate online gambling.

Crypto Crime and Stablecoin Inflows

Bitrace’s report highlights the growing issue of crypto-related crime, particularly in online gambling. A major concern is the substantial inflow of stablecoins to high-risk addresses, or blockchain wallets linked to illegal activities. In 2024, these inflows reached approximately $649 billion, reflecting a slight increase from the previous year. The most significant share of these risky transactions was found on Ethereum and TRON networks, exposing vulnerabilities in the crypto ecosystem.

Despite a slight decrease in the proportion of high-risk stablecoin transactions—down to 5.14% from 5.94%—the rate remains much higher than in 2021 and 2022, signaling a persistent issue. The continued flow of funds into criminal activities raises questions about the effectiveness of current security measures within the crypto industry.

Online Gambling Sector Flourishes

While the surge in crypto crime poses a significant challenge, the online gambling industry has continued to thrive. In 2024, the total transaction volume processed by gambling platforms and associated payment processors reached $217.8 billion, marking a 17.5% increase from 2023. A key driver of this growth has been the increasing acceptance of cryptocurrencies, particularly stablecoins, within the gambling sector.

USDC (USD Coin), a stablecoin, saw its share of stablecoin transactions grow dramatically, rising to 13.36% in 2024 from just 5.22% the previous year. This surge in stablecoin usage reflects a broader trend of cryptocurrencies becoming a primary method for transactions in the online gambling market. However, the increasing prevalence of crypto in this sector is accompanied by concerns about the integration of illicit activities.

Illicit Crypto Market Remains Robust

The report also sheds light on the persistence of the black and gray markets in crypto transactions. Blockchain addresses linked to illicit activities received over $278.1 billion in 2024, signaling a slight rise from the previous year. These markets, which operate outside of regulatory frameworks, continue to thrive alongside legitimate sectors like online gambling.

The report suggests that escrow services like Huione Guarantee have facilitated these illicit transactions, making it harder to detect and disrupt the flow of illegal funds within the crypto landscape. As the online gambling industry grows, it risks becoming a gateway for the next generation of crypto users to engage in both legitimate and illegal crypto-related activities.

Surge in Crypto Fraud

One of the most alarming findings in the report is the significant rise in crypto fraud. In 2024, stablecoin inflows to fraudulent addresses totaled a staggering $52.5 billion, surpassing the total amount seen in previous years combined. This surge is likely a result of both the increasing sophistication of fraud tactics and the improved detection capabilities within the crypto space. The surge in fraudulent activity suggests that as the crypto market matures, so too do the methods used by criminals to exploit it.

Regulatory Measures and Compliance Efforts

Despite the growing concerns over crypto crime, regulatory measures are starting to make an impact. In 2024, stablecoin issuers such as Tether and Circle froze over $1.3 billion in assets tied to illicit activities, marking a significant rise compared to previous years. Additionally, regulatory bodies such as the U.S. Office of Foreign Assets Control (OFAC) and Israel’s National Bureau for Counter-Terror Financing (NBCTF) have intensified their efforts to combat terrorist financing, although the inherent anonymity of crypto remains a major challenge.

Hong Kong’s regulatory approach has been cited as a model of effective market regulation. After implementing clearer legal frameworks and stronger compliance measures, the proportion of high-risk funds in stablecoin inflows within Hong Kong dropped sharply. This has demonstrated that with the right regulatory policies in place, it is possible to curb illicit activities and ensure greater market stability.

The Need for Stronger Regulation

Despite the positive strides in regulatory enforcement, the report underscores the need for further action to address the rising threats posed by crypto crime. The online gambling sector continues to capitalize on the growth of cryptocurrencies, but with the increasing use of crypto by criminal enterprises, stronger regulatory frameworks and compliance measures are essential.

For both operators and consumers, ensuring a safe and secure environment requires a concerted effort to curb illicit activities. While the potential for the crypto industry, including online gambling, is vast, the risks associated with crypto crime must be carefully managed to prevent further damage to the ecosystem.

IMPORTANT NOTICE

This article is sponsored content. Kryptonary does not verify or endorse the claims, statistics, or information provided. Cryptocurrency investments are speculative and highly risky; you should be prepared to lose all invested capital. Kryptonary does not perform due diligence on featured projects and disclaims all liability for any investment decisions made based on this content. Readers are strongly advised to conduct their own independent research and understand the inherent risks of cryptocurrency investments.

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