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Last year, illicit crypto addresses received all-time-high $14 billion but that was only 0.15% of total volume

ChainAnalysis | Jan 6, 2022

Crypto scams - Last year, illicit crypto addresses received all-time-high $14 billion but that was only 0.15% of total volumeCryptocurrency-based crime hit a new all-time high in 2021, with illicit addresses receiving $14 billion over the course of the year, up from $7.8 billion in 2020.  BUT those numbers don’t tell the full story.

Cryptocurrency usage is growing faster than ever before. Across all cryptocurrencies tracked by Chainalysis, total transaction volume grew to $15.8 trillion in 2021, up 567% from 2020’s totals. Given that roaring adoption, it’s no surprise that more cybercriminals are using cryptocurrency. But the fact that the increase was just 79% — nearly an order of magnitude lower than overall adoption — might be the biggest surprise of all.

In fact, with the growth of legitimate cryptocurrency usage far outpacing the growth of criminal usage, illicit activity’s share of cryptocurrency transaction volume has never been lower.

See:  NASAA: Crypto scams are the leading threat to investors in 2022

Transactions involving illicit addresses represented just 0.15% of cryptocurrency transaction volume in 2021 despite the raw value of illicit transaction volume reaching its highest level ever.

However, we also have to balance the positives of the growth of legal cryptocurrency usage with the understanding that $14 billion worth of illicit activity represents a significant problem. Criminal abuse of cryptocurrency creates huge impediments for continued adoption, heightens the likelihood of restrictions being imposed by governments, and worst of all victimizes innocent people around the world.

DeFi’s rise leads to new opportunities in crypto crime

In 2020, just under $162 million worth of cryptocurrency was stolen from DeFi platforms, which was 31% of the year’s total amount stolen. That alone represented a 335% increase over the total stolen from DeFi platforms in 2019. In 2021, that figure rose another 1,330%.

percentage of ilicit funds received by service type - Last year, illicit crypto addresses received all-time-high $14 billion but that was only 0.15% of total volume

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We’ve also seen significant growth in the usage of DeFi protocols for laundering illicit funds, a practice we saw scattered examples of in 2020 and that became more prevalent in 2021. Check out the graph below, which looks at the growth in illicit funds received by different types of services in 2021 compared to 2020.

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