The value of crime linked to cryptocurrencies nearly doubled last year to $14 billion, rising 79% from $7.8 billion in 2020.
According to Chainalysis’s latest report, around $ 10 billion worth of cryptocurrency is currently held by illicit addresses, as of the first week of the new year. The report defines illicit addresses as wallets associated with criminal activity such as crypto theft in the form of scams, ransomware, and Ponzi schemes.
Despite the record figure, illicit activities only constituted a mere 0.15% of the $15.8 trillion in total cryptocurrency transaction volume last year, a 550% increase over the year prior. However, the figures could still rise, as the analytics firm incorporates any further addresses tied to illegal transactions into the overall amount.
For example, Chainalysis reported that 0.34% of crypto transactions in 2020 were associated with illegal activity, which then dropped to 0.62%. But aside from an extreme outlier, in the form of the multi-billion dollar PlusToken Ponzi scheme in 2019, the proportion of crypto transactions associated with crime shows a downward trend.
Debasing DeFi
As transaction volumes in decentralized finance surged 912% last year, the report highlighted it as a new arena in which illicit crime has increasingly flourished. While the $162 million worth of crypto stolen from DeFi platforms in 2020 accounted for 31% of the total stolen that year, that figure was a 335% increase from 2019. Last year, that figure rose a staggering 1,330% to $2.3 billion, according to Chainalysis.
“The rise in DeFi-related crime is an example of how criminals often exploit new technology,” Kim Grauer, head of research for Chainalysis, told Reuters. “When DeFi started to expand this year, we saw a sharp increase in DeFi protocols used to launder money, as well as DeFi protocols being the real victims of crimes such as hacking.”
