Yes, we might not see it, as we cannot see who is using bitcoin, but for sure there are people who are using bitcoin like money to fund their illegal activity...maybe some people are keeping their money asset as bitcoin to make sure that government won't see it... but definitely it won't hurt bitcoin...
Of course. I'm pretty sure it's already happening at the moment I'm typing these words, and at the very moment you are reading this. Bitcoin is money, and money can do a lot of things, especially the illegal ones. But one things is always true : those activities are not just due to bitcoins and bitcoin is not responsible for those in any ways.