Crypto crimes saw a record high number last year in terms of value, blockchain analysis firm Chainalysis said.
The blockchain analysis firm reported recently that illegal addresses of criminals received $14 billion in digital currencies, up 79% from $7.8 billion in 2020.
Illicit addresses already hold over $10 billion worth of cryptocurrencies as of early 2022, Chainalysis said.
The report also shows the leading factor in the increase of stolen funds and scams is potentially due to the rise in decentralized finance (DeFi) – which facilitates crypto-denominated lending outside traditional banking.
In 2020, there was a 335% increase over the total cryptocurrency stolen from DeFi platforms in 2019 as less than $162 million worth of cryptocurrency was stolen from DeFi platforms, which was 31% of the year’s total amount stolen. While in 2021, there was a rise in the figure with another 1,330% to $2.3 billion, Chainalysis said.
“The increase in DeFi-related crime is an example of how criminals often exploit new technologies,” Kim Grauer, head of research at Chainalysis, told Reuters.
“When DeFi started to grow this year, we saw large increases in DeFi protocols being used to launder money as well as DeFi protocols being the actual victims of crimes such as hacking.”
Massive gains on tokens like Shiba Inu have pushed investors to venture on DeFi tokens while transaction volume also surged 912% in 2021.
Illicit addresses in the crypto world are defined as “wallets” tied to criminal activities such as ransomware, Ponzi schemes and scams. Illicit activities’ share of total crypto transaction volume remained low at just 0.15% in 2021. Total transaction volume surged to $15.8 trillion last year, up more than 550% from 2020 levels.
However, Chainalysis said that the 0.15% figure could increase as more addresses tied to illegal transactions are been identified.
Chainalysis said in its last crypto crime report that 0.34% of 2020’s crypto transactions were associated with illegal activity – that number is now at 0.62%.
“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,” said Chainalysis.
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