Crime-related financing soars on Justin Sun’s Tron blockchain, 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 cryptocurrency mogul Justin Sun’s Tron blockchain, a report 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 remained the most used stablecoin in criminal activities, TRM Labs said.

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

Bitcoin also remained 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 said.

While many factors drove the choice of blockchains for illicit activities, the 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, a senior policy adviser at TRM Labs, told the Post via email.

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

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

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

The US Securities and Exchange Commission last year announced charges against Sun and his companies, including Tron Foundation, for the unregistered offer and sale of cryptocurrency asset securities and fraudulent manipulation of the secondary market of TRX through wash trading, among others.

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