Cryptocurrency crime hit an all-time high in 2021, with an estimated $ 14 million going to illegal addresses online, according to a blockchain analysis just released by Chainalysis.
The amount of illegally obtained digital currencies It represented a 79% increase from the $ 7.8 billion in ill-gotten cryptocurrencies in 2020, according to the report.
In the first week of 2022 alone, Chainalysis claims that illicit addresses already have more than $ 10 billion in digital currency, with most in the hands of wallets already associated with crypto theft.
Cryptocurrency crime increases the likelihood of eventual regulation
These suspicious addresses often refer to wallets that have already been linked to criminal activity, including ransomware, Ponzi schemes, and other types of scams.
Still, despite these huge sums that have gone to bad actors, part of the illicit activities as part of the total volume of cryptocurrency transactions it stayed pretty low last year, at a mere 0.15%. The volume of all digital currency transactions increased to $ 15.8 trillion during 2021, an increase of more than five times, or 550%, from the levels observed the previous year.
Chainalysis noted, however, that the 0.15% figure may rise as it identifies more addresses linked to illegal transactions and incorporates them into the total volume, as it has in the past.
The firm reported in its 2020 summary that a total of 0.34% of crypto transactions that year were associated with illegal activities; however, after a more in-depth analysis, that amount rose to 0.62%.
"Criminal abuse of cryptocurrency creates huge impediments to continued adoption, increases the likelihood that governments will impose restrictions, and worst of all, victimizes innocent people around the world," Chainalysis stated in its report.
It seems that the people taking advantage of the system are now an established part of the cryptocurrency world, even aside from the gigantic fraud that rocked the digital currency world in 2019 with the "PlusToken" Ponzi scheme.
The very nature of digital currency, in the sense that it is not regulated by any national or international authority, leads to its vulnerability to fraud; The report stated that the rise of decentralized finance, known as DeFi, which helps digital currency lending outside of the traditional banking system, has played a huge role in the rise of stolen funds and fraudulent actions.
During 2020, Chainalysis reported that less than $ 162 million worth of cryptocurrencies had been illegally taken from DeFi platforms; that amount represented 31% of all funds that had been stolen during that calendar year. But it was also a 335% increase over the total amounts fraudulently taken from DeFi for all of 2019.
Partly due to the huge increase in the amounts of money circulating on these digital platforms, that number jumped a further 1.330% to $ 2.3 billion last year, Chainalysis revealed.
Transaction volume in the DeFi realm surged 912% last year, while huge gains in decentralized tokens like Shiba Inu have led investors to speculate on DeFi tokens.
"The rise in crime related to DeFi is an example of how criminals often exploit new technologies," Kim Grauer, head of research at Chainalysis, told Reuters interviewers.
"When DeFi started to grow this year, we saw huge increases in DeFi protocols that are used to launder money, as well as DeFi protocols being the real victims of crimes like hacking," he added.
