Money Mule Networks Surge 168% Fueling Digital Banking Fraud

Organized crime groups have industrialized digital banking fraud operations in the United States, with money mule networks surging 168% in the first half of 2025. Money mules are being recruited at an unprecedented scale, and they’re using stablecoins to transfer funds to crypto exchanges.

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The surge in fraud reflects a fundamental transformation in how criminals launder proceeds from account takeover attacks, investment scams and social engineering schemes before detection systems can intervene, according to BioCatch’s 2025 Digital Banking Fraud Trends report.

The report found that stablecoins are the catalyst for expanding their networks of money mules, who transfer or receive illegally obtained money on behalf of criminals, often without fully knowing the extent of the crime. Unlike volatile cryptocurrencies such as Bitcoin, stablecoins such as Tether and USD Coin maintain dollar parity while offering instant, irreversible transfers that bypass traditional anti-money laundering controls.

“While traceability of these assets continues to improve, law enforcement is behind,” said Robert Autrey, director, global advisory at BioCatch. “Most fraud-detection tools still prioritize the tracing of traditional cryptocurrencies. That gives bad actors a window, and they’re capitalizing on it.”

Between January 2020 and February 2024, 84% of romance and investment scam proceeds were laundered through Tether, the report said. By mid-2025, stablecoins accounted for 63% of all illicit on-chain transactions, with $649 billion in fraudulent funds flowing through the ecosystem.

Chainalysis reported that crypto crime in 2024 likely exceeded $51 billion, far higher than initially estimated, with stablecoins accounting for a dramatic shift in criminal preferences – jumping from 15% to 63% of illicit flows while Bitcoin dropped from 70% to 20%.

The surge indicates criminal organizations have optimized their cash-out operations to take advantage of the unique characteristics of stablecoins. Fraudsters drain victim accounts through account takeover attacks, transfer funds to mule accounts, then convert proceeds to stablecoins through exchanges that have weak KYC processes. These coins offer criminals dual advantages – stable pricing that eliminates volatility risk, and blockchain-based transfers that bypass traditional SWIFT monitoring and AML systems.

The crypto tokens’ perception as a digital dollar rather than risky cryptocurrencies increases victim compliance during social engineering attacks, helping to ensure victims will be more likely to follow instructions from scammers.

Traditional fraud detection systems struggle with stablecoin-based schemes because legitimate exchanges often process the initial transfers. Aggregate stablecoin supply surpassed $200 billion in March, creating vast liquidity pools that criminals exploit through seemingly legitimate transactions. Most traditional anti-fraud solutions were not designed to track crypto movements, and even fewer can identify the behavioral red flags that precede these transfers, the report said.

The report also documented trends across other fraud categories. For example, bot-driven account opening fraud increased 233% in the first half of 2025, while account takeover attacks rose 13%.