2021 Was The Worst Year In Crypto Crime World, Could Increase This Year

JAKARTA – Cryptocurrency crime soared and hit a record high last year in terms of value. There are illegal accounts that have received 14 billion US dollars in digital currency. This amount is up 79% from 7.8 billion US dollars in 2020.

The report, written by a blog from blockchain analytics firm Chainalysis, was released on Thursday, January 6 and cited by Reuters.

In early 2022, Chainalysis said banned accounts already held more than $10 billion of cryptocurrency, most of which was held by wallets linked to crypto theft cases.

Dark addresses are defined as wallets linked to criminal activity such as ransomware, Ponzi schemes, and other scams.

That said, the illicit activity's share of total crypto transaction volume remains low, only 0.15% in 2021. Total transaction volume jumped to 15.8 trillion US dollars last year, up more than 550% from 2020 levels.

Chainalysis, said the 0.15% figure could still rise as the company identifies more addresses associated with illegal transactions and incorporates them into the total volume.

In its latest crypto crime report, Chainalysis said that 0.34% of crypto transactions in 2020 were linked to illegal activity. That figure has now been raised to 0.62%.

“Criminal misappropriation of cryptocurrencies creates huge barriers to continued adoption, increases the likelihood of restrictions imposed by governments, and at worst costs innocent people around the world,” Chainalysis said.

However, the underlying trend also suggests that 2019 was the exception, a particularly remarkable year for crypto crime in large part due to the billion-dollar PlusToken Ponzi scheme. The crime has become a small part of the cryptocurrency world.

The report also says the increase in decentralized finance, or DeFi, which facilitates lending in cryptocurrencies outside of traditional banking, has been a big factor in the increase in stolen funds and fraud.

In 2020, less than $162 million worth of cryptocurrencies were stolen from the DeFi platform, which was 31% of the total year stolen. That represents a 335% increase in the total stolen from DeFi platforms in 2019. “In 2021, that figure is up another 1.330% to US$2.3 billion,” Chainalysis said.

DeFi transaction volume surged 912% in 2021, and Chainalysis says the huge gains in decentralized tokens like Shiba Inu have prompted investors to speculate about DeFi tokens.

"The rise in DeFi-related crime is an example of how criminals often exploit new technology," Kim Grauer, head of research at Chainalysis, said in an email to Reuters.

"As DeFi started to grow this year, we saw a huge increase in DeFi protocols used to launder money as well as DeFi protocols becoming real victims of crimes like hacking," he said.