Illegal use of cryptocurrencies hit a record $20.1 billion (nearly Rs.1.63.21 billion) last year as transactions with companies hit by US sanctions skyrocketed, as reported Data from blockchain analysis firm Chainalysis on Thursday showed.
the cryptocurrency The market faltered in 2022 as risk appetite waned and various crypto firms collapsed. Investors suffered huge losses and regulators called for more consumer protection.
Even as overall crypto transaction volume declined, the value of crypto transactions related to illicit activity increased for the second year in a row, Chainalysis said.
Transactions related to sanctioned companies increased more than 100,000 times in 2022, accounting for 44 percent of last year’s illicit activity, Chainalysis said.
Funds received from Russian exchange Garantex, sanctioned by the US Treasury Department in April, accounted for “a majority of 2022’s illicit volume,” Chainalysis said, adding that most of that activity “is likely to be Russian users who use a Russian stock exchange”. A Chainalysis spokesperson said wallets are flagged as “illegal” if they are part of a sanctioned entity.
Garantex did not immediately respond to an emailed request for comment.
The United States also last year imposed sanctions on cryptocurrency blending services Blender and Tornado Cash, which were allegedly used by hackers, including those from North Korea, to launder billions of dollars worth of cybercrime proceeds.
The volume of stolen cryptocurrencies increased by 7 percent over the past year, but other illicit crypto transactions, including those related to fraud, ransomware, terrorist financing, and human trafficking, have seen a decline.
“The market downturn could be a reason for this,” Chainalysis said. “We have found in the past that crypto scams, for example, generate less revenue during bear markets.”
Chainalysis said its estimate of $20.1 billion includes only activity recorded on the blockchain and excludes “off-chain” crimes such as fraudulent accounting by crypto firms.
The figure also excludes when cryptocurrencies are proceeds of non-crypto-related crime, such as when cryptocurrencies are used as a means of payment in drug trafficking, Chainalysis said.
“We must emphasize that this is a lower bound of the estimate – our measure of the volume of illicit transactions is sure to increase over time,” the report said, noting that the figure for 2021 is estimated at $18 billion ( nearly Rs.1,46,12 billion) from US$14 billion (nearly Rs.1,13,650 crore) as more scams were discovered.
© Thomson Reuters 2023
