Cryptocurrency Crime Means Harsher Time

In an Australian-first, researchers systematically reviewed 59 criminal cases involving Bitcoin and other cryptocurrencies in Australian courts between 2013 and 2022. 

Study lead author and Senior Lecturer in Law at RMIT’s Blockchain Innovation Hub, Dr Aaron Lane, said almost 80% of these cases involved allegations of drug offences, ranging from minor possession charges through to more serious importation and commercial trafficking charges. 

Other criminal cases included charges for firearms offences, dealing with proceeds of crime, and money laundering.

“In the cases where Bitcoin or another cryptocurrency was relevant to the offending, it was generally used as a means of payment for illicit goods,” explained Lane. 

Importantly, cryptocurrency use itself was a factor associated with harsher sentencing in many of these cases.

“Our study finds that the use of cryptocurrency in the commission of a criminal offence is seen by courts as a factor that indicates sophistication or seriousness of the offence. This results in a harsher sentence for offenders, compared to those who commit a similar crime with regular currency,” said Lane. 

Study co-author and Associate Lecturer in Law at RMIT’s Graduate School of Business and Law, Lisanne Adam, said there has long been a perception that Bitcoin and other cryptocurrencies are associated with sophisticated criminal behaviour. 

“One reason for this is that cryptocurrency is the only method of payment on dark web marketplaces, and sentencing judges are keen to send a message to deter potential offenders,” she said.    

“Cryptocurrency is potentially attractive to criminals because the technology facilitates seamless global transfers without the friction of the traditional banking system – and in a way that can be difficult to identify”. 

Analysis showed while Australian law enforcement has cryptocurrency expertise, most offenders are caught using traditional police methods such as intercepting packages or telephone intercepts. 

Cryptocurrency is no longer a niche with an estimated 1 million Australians now holding a cryptocurrency account. 

The study shows that it is appearing more frequently in Australian courts as adoption of the technology has grown. In 2013, there was a single court case involving cryptocurrency. In 2020, there were 46. 

Mass adoption has implications for the courts and the wider legal profession. In many of the sentencing decisions there is little, if any, consideration given to the type of cryptocurrency transactions being made, which Adam said is a cause for concern.  

“There is a risk that law enforcement prosecutors characterise cryptocurrency as a marker of sophistication in crime, which is not always the case. Law enforcement need to effectively determine the level of sophistication in the crime and present a fair case,” she said.   

“Meanwhile, future cases are likely to be even more complex,” predicted Lane. 

“Legal practitioners will need to be cryptocurrency literate so that they understand the commercial and legal significance of cryptocurrency transactions and make appropriate submissions to the court,” Dr Lane concluded.  

'Crime and Cryptocurrency in Australian Courts' is published in the Monash University Law Review (Vol 48, No 3).

Story by: Katie Comas