As on-chain data becomes increasingly transparent, the crypto industry finds itself in its darkest moral low.
On-chain investigator ZachXBT recently published an article pointing out that the crypto sector has entered a “crime supercycle,” with politicians leading the way in issuing tokens, courts dismissing multiple controversial lawsuits, and protocol developers turning a blind eye to hackers laundering money. He expressed concerns that the corruption within blockchain could lead to the unsustainability of numerous on-chain ecosystems.
Crime Prevails: Protocols Turn a Blind Eye to Illegally Stolen Funds
ZachXBT criticized in his article that the rules of today’s crypto world have been turned upside down, with crime entering a supercycle that is more rampant than ever before. He pointed out, “Some protocols have witnessed over 50% of on-chain activity coming from stolen funds, yet the teams choose to pocket transaction fees and do nothing.”
Taking the North Korean hacker organization Lazarus Group as an example, Zach revealed their success in laundering stolen funds from multiple hacking incidents, including Bybit, DMM Bitcoin, and WazirX, using small OTC trading firms and certain mixing or privacy protocols, without further consequences:
“I estimate that the scale of illegal funds circulating on the Tron chain is at least between $5 billion and $10 billion, most of which are difficult to trace.”
After all, compared to reporting to regulators or freezing black money, development teams are more concerned with maintaining data performance and revenue sources; moral considerations have evidently been selectively ignored in the face of profit.
Fraud Justified, Regulation Permits KOLs to Cut the Leeks
Not only hackers, but Zach also pointed to the complicity of communities and key opinion leaders (KOLs). He stated that over the past few years, numerous influencers and KOLs have not disclosed their promotional activities for which they received compensation, which is actually illegal in most jurisdictions, yet it continues to happen:
“Government agencies could actually impose fines on all KOLs or projects that have never disclosed paid advertisements over the years, earning between $50 million and $100 million. If they spent their time on regulation instead of chasing open-source developers or decentralized protocols, things might be a bit better.”
He candidly admitted, “The reason this situation is common is simply that there has never truly been a serious consequence.”
The logic behind such behavior is cruel and realistic: without legal consequences, the possibility of stopping is virtually nonexistent in the short term.
Does Blockchain Illuminate Darkness or Amplify It?
In light of various scandals in the crypto industry, some users question whether blockchain has only made crime more rampant, rather than providing clarity. Zach responded:
“Both. The chain is indeed very transparent, but this field has too much money, allowing some who were unprepared to suddenly become complacent and reckless after instant wealth, giving hackers many free opportunities to make money.”
On the other hand, as Tayvano, the founder of MyEtherWallet, stated, perhaps the reward system within the crypto field itself has deviated from the right track, punishing those who do serious things while those who engage in rug pulls go unscathed:
“I don’t believe things will change unless serious developers who create new value can receive more rewards than those who extract value and transfer it meaninglessly.”
Therefore, she believes that the crypto space will attract more antisocial, selfish, and corrupt individuals, while those who are honest, collaborative, and self-sacrificing builders are instead marginalized and suppressed; this no longer seems to be a suitable place for creating the future.
The Cost of Short-term Profits is the Collapse of Long-term Trust and Structure
Finally, Zach pointed out a paradoxical phenomenon: “Now is actually the most profitable time to do bad things,” but this tragically symbolizes that the industry is at its most dangerous turning point.
Reflecting on the narrative that has lacked novelty over the past six months, the token launch platform Pump.fun has so far generated an astonishing revenue of $700 million, with a purely value-extraction gambling platform becoming a major entity:
“Like it or not, gambling remains the primary use case in this industry.”
Zach admitted that compared to solving problems, people are more eager to replicate arbitrage models. This not only makes fraud more prevalent but also causes the entire crypto world to lose the initial core values of “decentralization, trust, and innovation.”
Risk Warning
Investing in cryptocurrencies carries a high level of risk, and prices can be highly volatile; you may lose your entire principal. Please evaluate risks cautiously.