Illicit Crypto Transactions Hit All-time High of $14B in 2021

Criminal activity surged last year — but represented all-time low 0.15% of crypto transaction volume


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key takeaways

  • Illicit transaction volume increased 79% year over year while total crypto volume rose by 567%, according to Chainalysis
  • Cybercriminals have laundered roughly $33 billion worth of crypto since 2017

Illicit crypto transactions reached an all-time high $14 billion last year, but criminal activity’s share of cryptocurrency transaction volume has never been lower, according to a Chainalysis report published Wednesday.

Although the value of illicit transactions surged in 2021 from $7.8 billion the year before, these nefarious transactions accounted for 0.15% of crypto volume last year, down from 0.62% in 2020, the report said.

Source: Chainalysis Report

Total transaction volume across cryptocurrencies tracked by Chainalysis grew to $15.8 trillion in 2021, up 567% from 2020.

“Given that roaring adoption, it’s no surprise that more cybercriminals are using cryptocurrency,” the report states. “But the fact that the increase in illicit transaction volume was just 79% — nearly an order of magnitude lower than overall adoption — might be the biggest surprise of all.”

Crypto-based crime spiked in 2019 as transactions involving illicit addresses represented nearly 3.4% of crypto transaction volume, the Chainalysis report notes. The PlusToken Ponzi scheme occurred that year, reportedly defrauding investors out of more than $2 billion worth of crypto.

Decentralized finance (DeFi) protocols played a much greater role in laundering illicit funds in 2021, the report adds. Laundering through DeFi protocols increased by 1,964% from the prior year, reaching $900 million.

Cybercriminals have laundered roughly $33 billion worth of crypto since 2017, with most of that moving to centralized exchanges over time.

The amount of crypto that criminals are holding is hard to know, according to Chainalysis, as law enforcement has seized illicitly obtained assets.

The IRS Criminal Investigation team announced in November that it had seized $3.5 billion worth of cryptocurrency in 2021. The Department of Justice also recovered $2.3 million from the ransomware group responsible for the attack on Colonial Pipeline.

More recently, the DOJ announced last week that it had recovered the majority of the cryptocurrency stolen during the 2016 Bitfinex hack, valued at roughly $3.6 billion.

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