Illicit Transaction Activity Hit All-time High in Value in 2021: Chainalysis

Aaron Limbu   Feb 17, 2022 11:10 4 分钟阅读

The latest report suggests that cryptocurrency-based crime hit a new all-time high in 2021, with “illicit addresses receiving $14 billion over the year, up from $7.8 billion in 2020,” which amount was doubled to 2020, according to blockchain analytics platform Chainalysis.

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Although the crypto crime hit a new all-time high last year, the increase in illicit transaction volume was just 79%, “nearly an order of magnitude lower than overall adoption,” according to the report. It indicates that the possibility of “ the growth of legitimate cryptocurrency usage far outpacing the growth of criminal usage, as illicit activity’s share of cryptocurrency transaction volume has reached an All-Time-Low.”

The report was also divided into year-end criminal balances over the last five years, further broken down by the types of illicit activity from which the funds were derived. 

Although law enforcement saw a growth in its ability to seize cryptocurrency from criminals in 2021, according to a report by blockchain analytics platform Chainalysis, there was an exceptional rise in criminal balances in 2021. By the end of the year, criminals held $11 billion worth of funds with known illicit sources, compared to just $3 billion at the end of 2020.

Among various kinds of criminal balances, stolen funds were the most dominant by the end of the year, with 93% at $9.8 billion.

Criminal balances fluctuated throughout the year, from a low of $6.6 billion in July to a high of $14.8 billion in October.

Criminal balances refer to any funds currently held by addresses. Chainalysis has been attributed to illicit actors, the report stated, adding that these addresses can belong to criminal services, like darknet markets, but in some cases can also be hosted by private wallets, such as in cases involving stolen funds.

According to Chainalysis, “the fluctuations are a reminder of the importance of speed in cryptocurrency investigations, as criminal funds that have been successfully traced on the blockchain can be liquidated quickly.”

Darknet market funds came next at $448 million, followed by scams at $192 million, fraud shops at $66 million, and ransomware at $30 million.

Over $25 billion of crypto is controlled by more than 4,000 criminal whales 

In terms of liquidation, the report added that “darknet market vendors and administrators tend to hold their funds the longest while wallets with stolen funds tend to hold for the shortest amount of time.”

Even though stolen funds account for the vast majority of criminal balances, it was reported that most of those holdings belong to extremely large wallets that hold longer than is typical for others in the stolen fund’s category.

After investigating by analyzing the balances of criminal whales, Chainalysis overall identified 4,068 criminal whales holding over $25 billion worth of cryptocurrency.

Chainalysis stated that a criminal whale refers to any private wallet holding $1 million or more worth of cryptocurrency that has received more than 10% of its funds from illicit addresses.

The report added that of all cryptocurrency whales, criminal whales represent 3.7%. Most of them received either a relatively small or extremely large share of their total balance from illicit addresses.

A total of 1,374 criminal whales received between 10% and 25% of their total balance from illicit addresses, 1,361 criminal whales received between 90% and 100% of their total balance from illicit addresses and in total, 1,333 criminal whales received between 25% and 90% of all funds from illicit addresses.

For criminal whales, darknet markets are the biggest source of illicit funds, followed by scams second and stolen funds third, Chinalysis reported.

While in February 2022, the U.S. Department of Justice (DOJ) seized the current largest-ever recovery of stolen assets in either cryptocurrency or fiat. The seizure was of $3.6 billion worth of Bitcoin connected to the 2016 hack of Bitfinex.

According to Chainalysis, the law enforcement’s ability to seize cryptocurrency from criminals not only allow “financial restitution for victims of cryptocurrency-based crime” but also “disprove the narrative that cryptocurrency is an untraceable, unseizable asset perfect for a crime”

There is a difference in the ability to track criminal whales and quantify their holdings from one public data set in comparison in comparison to fiat-based crime, Chainalysis said. “In fiat, the highest net worth criminals have murky networks of foreign banks and shell corporations to obfuscate their holdings, but in cryptocurrency, transactions are saved on the blockchain for all to see,” the blockchain analytics platform said.

Earlier Reports from Chainalysis

In another recent report, Chianlysis said that non-fungible tokens (NFT) have witnessed a rise in malpractices as turns into increasingly volatile, Blockchain.News reported.

The report stated that NFTs had seen a growing number of inflated prices, liquidity, and money laundering cases, especially through wash trading.

Wash trading and money laundering have occurred through questionable flows running through ultra-hot NFTs, a sub-sector of the growing cryptocurrency market.

These tactics are proving “extremely easy to trace on the blockchain” as the practice can be pervasive in the crypto markets, according to Chainalysis’ss director of research, Kim Grauer.

Chainalysis, in an earlier report, stated that there was a 30% increase in cryptocurrency-related cybercrime last year from 2020.

As reported by Blockchain.News citing Chainalysis, cybercriminals laundered $8.6 billion in cryptocurrencies last year, and overall they have laundered more than $33 billion worth of crypto since 2017. Chainalysis’ss report also stated that hackers had been actively stealing smaller amounts of cryptocurrency from individual users using malware available on the internet or darknet over the last few years.


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