Tron’s Role in Illicit Crypto Activity: A Cause for Concern or an Opportunity for Reform?

The cryptocurrency landscape continues to evolve, but one constant remains—bad actors seeking loopholes within blockchain networks. A recent report from blockchain analytics firm TRM Labs highlights that over half of illicit crypto activity in 2024 was conducted on the Tron network, raising serious questions about regulatory oversight and network security.

Tron Dominates Illicit Crypto Transactions

According to TRM Labs, of the $45 billion in recorded illicit crypto transactions in 2024, more than $26 billion was linked to Tron. This figure outpaces both Ethereum and Bitcoin in terms of unlawful financial activity, particularly transactions associated with sanctioned entities, scams, hacks, and fraud schemes.

Why Tron? The network’s appeal to malicious actors lies in its low transaction fees, accessibility to popular stablecoins, and the ease of executing transactions via smart contracts. As Ari Redbord, Global Head of Policy at TRM Labs, puts it: “Illicit actors are just like the rest of us. They look for efficiency and convenience.”

North Korea and the Growing USDT Concern

One of the most alarming findings from TRM Labs’ research is the significant use of Tron by North Korean hackers. In 2024 alone, North Korea reportedly stole over $800 million from various crypto projects, funneling the funds through over-the-counter (OTC) brokers on the Tron blockchain within hours.

Beyond North Korea, the United Nations has pointed to USDT on Tron as a preferred vehicle for money laundering operations in East and Southeast Asia. Tether and Tron, however, have strongly pushed back on these claims, asserting that they actively collaborate with authorities to curb illicit activities.

The US Government’s Scrutiny on USDT

The concerns don’t stop at international cybercrime. US lawmakers have raised red flags over the potential role of USDT in financing the trafficking of fentanyl, a deadly synthetic opioid. Blockchain intelligence firm Elliptic reported in 2023 that Chinese manufacturers of fentanyl precursor chemicals received millions of dollars in Bitcoin and USDT payments.

Tether CEO Paolo Ardoino, in an interview with DL News, stated that Tether remains committed to working with law enforcement to mitigate criminal misuse of its stablecoin. Despite these assurances, TRM Labs continues to report a high volume of illicit USDT transactions occurring on Tron.

Signs of Progress: Can Tron Clean Up Its Act?

Despite its dubious distinction as the leading network for illicit crypto transactions, Tron has made strides in addressing these issues. TRM Labs’ report shows a $6 billion year-over-year decline in illicit activity on Tron in 2024, indicating that ongoing enforcement efforts may be taking effect.

A significant factor in this decline is the formation of the T3 Unit, a collaboration between TRM Labs, Tether, and Tron, aimed at stopping the unlawful use of USDT on the network. Since its launch in 2024, the unit has frozen over $130 million in illicit proceeds, signaling a proactive shift in Tron’s approach to compliance and security.

BitGalactic’s Take: What This Means for the Future of Crypto Regulation

From BitGalactic’s perspective, Tron’s situation underscores the fine line between innovation and exploitation in the crypto space. While decentralization and low fees offer immense benefits, they also open the door to misuse. The real question is whether Tron and other blockchain networks will take stronger steps to self-regulate before stricter government intervention inevitably arrives.

With increasing scrutiny from both global regulators and industry players, it’s clear that Tron’s future hinges on its ability to combat illicit activity while maintaining its status as a leading blockchain network. The formation of the T3 Unit is a step in the right direction, but the crypto community will be watching closely to see whether Tron can truly turn the page on its troubled past.