With a reported surge in cryptocurrency usage, illicit activities surrounding it are also happening. According to blockchain platform Chainalysis, cryptocurrency transaction volume went up by 567% in 2021 from 2020 while illicit transaction volume went up by 79%. According to the report, the growth of legitimate currency usage is outpacing the growth of cryptocurrency crimes.
Illicit transactions were reportedly at 0.15% of total cryptocurrency transactions in 2021, and according to the last crypto crime report, 0.34% of 2020’s cryptocurrency transactions were related to illegitimate transactions. Despite everything, the yearly trends suggest that with the exception of 2019, cryptocurrency crimes are reportedly decreasing, with law enforcement expected to play a part in it. Throughout 2021, examples have been seen, from the Commodity Futures Trading Commission (CFTC) filing charges against several investment scams to the Federal Bureau of Investigation’s takedown of the prolific REvil ransomware strain.
Categories of illicit activity which have been growing are stolen funds and scams. Scamming revenue reportedly went up to $7.8 billion in 2021, and they mainly came from a relatively new scam called rug pulls. As per the report, roughly 90% of the total value lost to rug pulls in 2021 was attributed to the centralised exchange called Thodex. Rug pulls are believed to be common to decentralised finance (DeFi) in terms of transaction volume and technicality. With roughly $3.2 billion worth of cryptocurrency stolen in 2021, $2.2 billion of it represented DeFi. There has also been a reported growth in DeFi protocols for laundering illicit funds.
Crimes related to DeFi and cryptocurrency is just one area of focus. With other crimes like ongoing ransomware threats, NFT based illicit activity, cryptocurrency money laundering, coming to light, the collaboration between public and private sectors is believed to be important against these threats.
(With inputs from the Chainalysis Crypto Crime Report, 2022)
