Chainalysis Report: Illicit Addresses Received $14B in 2021

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  • 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

Though illicit addresses received an all-time high $14 billion worth of crypto last year, criminal activity’s share of cryptocurrency transaction volume has never been lower.

The $14 billion figure in 2021 was up from $7.8 billion of cryptocurrency value gained by illicit addresses the year before, according to a Chainalysis report published Wednesday. Still, these nefarious transactions accounted for 0.15% of crypto volume last year, down from 0.62% in 2020.

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.

The use of decentralized finance (DeFi) protocols for laundering illicit funds in 2021 increased by 1,964% from the prior year, reaching $900 million, the report adds.

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, amounting to roughly $3.6 billion.

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  • Ben Strack

    Ben Strack is a Denver-based reporter covering macro and crypto-native funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local newspapers on Long Island. He graduated from the University of Maryland with a degree in journalism.

    Contact Ben via email at [email protected]

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