Yes, Bitcoin is used for illegal activities.That's why some countries still have bitcoin banned.If you read the recent news Some people stole millions of dollars from bank account and then convert it to bitcoin.So, Hackers or scammers using bitcoins as a payment option for their illegal activities.
This is one of the problems faced by bitcoins. It is easily susceptible to evil motives. People can use Bitcoins as one of the vessels for money laundering.