Crypto uses an aggravating factor for sentencing: Aussie court study

Criminals who used cryptocurrency as part of committing a crime are more likely to receive a harsher sentence in Australian courts, a new study has found.

The study, titled “Crime and Cryptocurrency in Australian Courts”, published Monday in the Monash University Law Review, found that the use of cryptocurrency in criminal activity was seen as indicative of an increased “degree of planning” and sophistication, leading to that the court “considers general deterrence over other sentencing purposes:”

“Obtaining and using cryptocurrency for payments requires a greater level of technical skill compared to the general population who may not be familiar with these payments.”

The study analyzed 103 cases presented to Australian courts between 2009 and 2020, focusing specifically on 59 criminal cases and their sentencing procedures.

Not so sophisticated

Study authors Aaron Lane and Lisanne Adam found that Australian courts generally perceive crypto use as indicative of “technical sophistication” and “intentional obfuscation”.

However, the pair argued that Australian courts may be “too eager to adopt a relatively simplistic characterization” of crypto use in criminal activity, arguing that not all crypto use may imply the same level of sophistication:

“Sophistication exists on a spectrum.”

Courts must be able to distinguish between the different types of crypto-transactions used by perpetrators, especially as the wider use of digital assets continues to grow.

Offenders who used centralized digital currency exchanges – where Know Your Customer (KYC) requirements mean identification can be easily obtained – cannot be treated in the same way as offenders who deliberately use anonymous non-custodial wallets or mixing services to hide transaction data.

Cryptocurrency and digital assets have a long-standing reputation by some in the public realm as being linked to illegal activity, most likely as a result of Bitcoin’s original association with the notorious online black market Silk Road.

While this negative association remains across the digital asset industry, the amount of crypto used for illicit activity has never been lower, according to a recent report by CipherTrace.

The report estimated that illegal activity was between 0.62% and 0.65% of total cryptocurrency activity in 2020 and has since fallen to between 0.10% and 0.15% of total activity through 2021.