A recent New York Times report on stablecoins has sparked a strong backlash within the crypto industry. Jake Chervinsky, Chief Legal Officer of Variant Fund, criticized the report as a “complete hit piece,” arguing that it deliberately exaggerates the role of stablecoins in global illicit finance while ignoring the data context and progress in industry regulation.
The report claims that stablecoins are becoming the “tool of choice” for money launderers and sanctioned entities, citing Chainalysis data that over $25 billion in illicit funds flowed through stablecoins in 2024. The New York Times further warns that as Russian-linked individuals and terrorist organizations use cryptocurrencies, tokens pegged to the US dollar could weaken America’s ability to leverage the dollar-based sanctions system.
In response, Chervinsky pointed out that stablecoins are being targeted because “they are the most direct way the crypto industry is improving the financial system.” He emphasized that the report ignores key context: although on-chain stablecoin usage has increased, crypto’s overall share of global illicit funds remains extremely low—just around 0.14% of the world’s illicit funds, and has stayed below 1% over the past five years.
On-chain analytics show that in 2020, Bitcoin, due to its high liquidity, accounted for over 75% of on-chain illicit fund flows; by 2024, the share for stablecoins had risen to 63%, reflecting how criminal activity migrates with changes in market structure. However, this does not mean cryptocurrencies play a central role in the global criminal system.
Compliance and law enforcement within the industry are also strengthening in tandem. Tether’s T3 financial crimes unit froze over $300 million in illicit funds in 2025, with a cumulative total exceeding $3 billion, and it cooperates with global investigative agencies to track on-chain crime. This demonstrates the high efficiency and transparency of on-chain monitoring, but regulatory agencies still need to speed up their response in order to intercept funds before they are converted or withdrawn.
Nevertheless, crypto security risks persist. In 2025, the amount lost to hacking and theft reached $3.25 billion (excluding December data), up 8.2% from 2024. The largest incident occurred in February with a CEX hack; in November, the Balancer incident caused the scale of hacks to surge tenfold from October to $194 million. Overall, the industry continues to face high asset loss pressures, and security remains a significant challenge for the crypto ecosystem.
Against the backdrop of intensifying controversy and regulatory tug-of-war, the role of stablecoins is becoming increasingly critical: they are both an important tool for global crypto payments and settlements, and a focal point for regulatory scrutiny. The crypto industry urges that media and the public, when discussing stablecoin risks, rely on complete and accurate data to avoid one-sided narratives that could misinform policy-making and market perception.
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