Cryptocurrency crime will reach an all-time high in value in 2021, according to Chainalysis.
CSU, NEW YORK, Jan 6 – According to a blog post published on Thursday by blockchain research company Chainalysis, cryptocurrency-related crime hit a new high in terms of value last year, with unlawful addresses receiving $14 billion in digital currencies, up 79 percent from $7.8 billion in 2020.
According to Chainalysis, illegitimate addresses possess approximately $10 billion in cryptocurrencies as of early 2022, with the bulk of this held by wallets linked to cryptocurrency theft.
Illicit addresses are wallets linked to illicit activities, including ransomware, Ponzi schemes, and phishing scams.
However, criminal activity accounted for just 0.15 percent of overall crypto transaction volume in 2021. Last year, total transaction volume increased by more than 550 percent from 2020 levels to $15.8 trillion.
The 0.15 percent percentage, according to Chainalysis, might possibly climb when the company discovers additional addresses linked to unlawful transactions and combines them into the overall volume.
Chainalysis said in its most recent crypto crime report that 0.34 percent of 2020’s crypto transactions were involved with unlawful behavior. The percentage has now risen to 0.62 percent.
“Criminal exploitation of cryptocurrencies presents significant barriers to further adoption, increases the possibility of government limitations, and, worst of all, victimizes innocent individuals all around the globe,” Chainalysis stated.
Despite this, the underlying trend indicated that, with the exception of 2019, which was an exceptional outlier year for cryptocurrency crime owing to the multibillion-dollar PlusToken Ponzi scam, crime had become a minor element of the cryptocurrency ecosystem.
The surge in decentralized finance, or Defi, which allows crypto-denominated loans outside of conventional banks, has also been cited as a contributing cause to the spike in stolen cash and frauds, according to the paper.
In 2020, fewer than $162 million in cryptocurrencies were stolen from Defi systems, accounting for 31% of the total amount taken for the year. This was a 335 percent rise from the total amount of money taken on Defi platforms in 2019.
According to Chainalysis, that sum will have increased by 1,330 percent to $2.3 billion by 2021.
In 2021, the amount of Defi transactions increased by 912 percent, according to Chainalysis, and outsized returns on decentralized tokens like Shiba Inu have driven investors to bet on Defi tokens.
“The surge in Defi-related crime is an example of how criminals often employ new technology,” Kim Grauer, head of research at Chainalysis, said in an email to CSU World Record.
“As Defi grew in popularity this year, we noticed a significant rise in Defi protocols being utilized to launder money and Defi protocols becoming the real victims of crimes like hacking.”
