The Controversy Surrounding Stablecoins and Illicit Activities
Jake Chervinsky, the Chief Legal Officer at crypto venture capital firm Variant Fund, recently called out a New York Times (NYT) article that criticized stablecoins as a ‘hit piece.’ The report claimed that stablecoins have emerged as a preferred tool for money launderers and criminals evading U.S. sanctions. Highlighting data from Chainalysis, the article alleged that over $25 billion in illicit funds had been transferred using stablecoins in 2024 alone. The NYT emphasized that the increasing use of these dollar-pegged tokens could undermine essential U.S. foreign policy mechanisms aimed at isolating adversaries from the financial system. In stark contrast, Chervinsky argues this narrative selectively attacks stablecoins, which he believes represent a significant advancement in the financial landscape.
Stablecoins: The Mechanics Behind their Adoption
Despite the NYT’s critical stance, it is essential to understand the role of stablecoins in the broader financial ecosystem. Stablecoins have gradually gained traction as a vital tool for liquidity in the crypto market. While the NYT highlighted a concerning trend of rising criminal use, it is not wrong to say that the increase in illicit activity is a complex issue that extends beyond stablecoins. Data from Chainalysis indicates that stablecoins accounted for 63% of illicit on-chain volumes in 2024. However, this surge needs context: Bitcoin takes a larger share of illicit on-chain flows, having constituted over 75% of such activities back in 2020.
Misconceptions: The Bigger Picture of Illicit Crypto Activity
One of the central points of contention is the paper’s assertion about the impact of stablecoins on global illicit flows. Though it is acknowledged that these digital assets have become more popular among criminals, Chainalysis data shows that cryptocurrency transactions remain a minor fraction—just 0.14%—of total global illicit activity over the past five years. The industry has made substantial strides in combating illicit funding, particularly led by Tether, the largest stablecoin issuer, emphasizing compliance and monitoring efforts. By October 2025, Tether had successfully frozen over $300 million in funds linked to crime, reflecting a concerted effort to channel illicit activity into transparent frameworks.
The Role of Tether and Financial Integrity
Tether has increasingly positioned itself as a leader in driving financial integrity within the cryptocurrency space. Their proactive measures accentuate the fact that the adaptation of technology, such as blockchain, can enhance accountability and traceability. Importantly, Tether has implemented rigorous mechanisms to monitor and sanction suspicious activities, including blocking over $3 billion related to illicit funds. While the speed of cryptocurrency transactions presents challenges for regulatory authorities in identifying and freezing unethical activities promptly, the existing measures indicate that stablecoins can still align with compliance and law enforcement efforts.
The Surge in Crypto Hacks and Security Risks
However, it’s crucial to acknowledge that the crypto ecosystem faces significant security risks, highlighted by a recent spike in hacking incidents. In 2025, the total value of stolen assets reached approximately $3.25 billion, marking an 8.2% increase from 2024. The largest theft this year occurred in February with the Bybit exchange hack, while noteworthy hacks in November escalated alarmingly, reflecting a broader trend of vulnerability in the crypto landscape. This growing threat emphasizes the need for robust security protocols to protect investors and minimize illicit activity within the market.
Concluding Thoughts: The Complex Landscape of Crypto and Illicit Flows
In summary, while the NYT raises valid points regarding the illicit use of stablecoins for criminal activities, the broader narrative should not overlook the fact that cryptocurrencies, including stablecoins, represent less than 1% of global illicit financial flows. As the industry matures and regulatory measures evolve, the focus should shift toward fostering a balanced dialogue that recognizes the benefits and challenges of utilizing stablecoins. By doing so, stakeholders can work towards multi-faceted solutions that prioritize transparency and security in this rapidly evolving financial landscape.
