Why not. More than banking criminals will love to use bitcoin fit they illegal transaction because bitcoin is anonymous and will help them to stay hidden from the bright. Also in silk road bitcoin is highly used because it doesn't have much transaction charge, it doesn't have any barriers, it is pseudonymous and no one could ever track the transaction owner. So it's ease to use bitcoin for illegal activities.
This is not entirely right, criminals are mostly still using fiat for their illegal business bitcoin is just a small part of it, and second unless you take measures tracking your bitcoin transactions is very easy and there have been some raids that closed down some of those dark marketplaces.
Most of the illegal stuff happens with fiat, that's for sure. But no matter how small the number of Bitcoin related illegal activities are compared to fiat, people will always point their dirty finger at Bitcoin. If you talk to them and explain that fiat is the real problem, then they will either cut the discussion, or tell you that Bitcoin is the currency of the underworld. The media has brainwashed the average person to a serious level. No matter what good features of Bitcoin you highlight, for them it still doesn't make a difference.
You said it right, that's too obvious since we are still 1% of the total population in the world, although we may consider that illegal activities are rampant in crypto world and bitcoin is mostly use, we are still not a big threat and bitcoin is just a currency which can be use both in illegal and legal same with fiat.