Crypto crime raised a record $14bn in 2021, says Chainalysis
Crypto crime hit a new all time high in 2021 with illicit addresses receiving $14bn (£10.3bn) amid an explosion of interest in digital assets.
Activity associated with illicit addresses almost doubled this year, up from $7.8bn in 2020 according to a new report by blockchain analytics firm Chainalysis.
However, skyrocketing transaction volumes meant that crime accounted for the smallest proportion of crypto transactions on record, at just 0.15 per cent. New investors entered the crypto space in droves this year causing total transaction volumes to jump by 550 per cent to stand at $15.8tn.
“Given that roaring adoption, it’s no surprise that more cybercriminals are using cryptocurrency,” the Chainalysis report read. “The fact that the increase was just 79 per cent — nearly an order of magnitude lower than overall adoption — might be the biggest surprise of all,” the report added.
Scamming was one of the most lucrative forms of crypto crime in 2021 with revenue rising 82 per cent year on year to $7.8bn of digital assets.
According to Chainalysis over $2.8bn of this total came from rug pulls, an increasingly popular scam where developers build apparently legitimate cryptocurrency projects before disappearing with investor funds.
While criminals used increasingly sophisticated methods to dupe victims law enforcement also upped its game.
The report said that the growing ability of law enforcement to seize crypto was “one promising development in the fight against cryptocurrency-related crime” seen this year. The IRS Criminal Investigations seized over $3.5bn worth of cryptocurrency in 2021 representing 93 per cent of all funds seized by the division during that time period.
Read more: UK financial watchdog calls in Bitcoin experts to combat crime