Addresses that are related to various illicit activities surged in 2021
According to analytics firm ChainAnalysis, more than 4,000 addresses linked to criminal activity currently hold more than $25 million worth of cryptocurrency. Criminal whales make up nearly 4% of all crypto whales. The aforementioned addresses are somehow related to activities such as money laundering, drug trafficking and terrorism.
In 2021, the illegal activity in the cryptocurrency industry has increased gradually as more private funds started flowing into the industry. But with the increased activity of criminal elements in crypto, law enforcement has discovered a new way of seizing digital assets from criminals.
According to the analytics firm, in 2021, the IRS-CI seized more than $3.5 billion worth of cryptocurrency from wallets marked as linked to criminal activity. But at the same time, regulators do not disclose the technical methods of seizing these assets.
The most recent and, most likely the biggest, one-time exemption of digital assets was related to a pair of criminals that were either conducted or related to the Bitfinex hack in 2016. Access to private keys was obtained through cloud storage services that hackers used for storing quite sensitive data.
Most common type of criminal activity
According to ChainAnalysis, the majority of “criminal wallets” are tied to stolen funds and darknet markets. In 2021, hackers and scammers were able to steal at least $8 billion from gullible or inexperienced users who had just entered the industry.
At the end of 2021, the volume of funds concentrated in criminal wallets has increased after a series of DeFi hacks. Numerous platforms and users became victim to various exploits found in smart contracts.
Depending on the age of the coins on illicit whale addresses in 2021, they tend to either diversify their holdings or transfer funds to fiat as soon as possible. This is likely related to law enforcement finding new ways to seize digital funds.
