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Record $14bn flowed into crime-linked crypto wallets in 2021


Criminals used a report quantity of cryptocurrencies for illicit functions in 2021 however the total progress of digital asset markets outstripped the rise in scams.

The quantity of crypto despatched to addresses with identified felony associations shot to a report $14bn final yr, greater than doubling from 2020, based on analysis from information firm Chainalysis.

Scams, ransomware and theft rose 79 per cent in greenback phrases final yr however the total market expanded by 550 per cent, with $15.8tn price of cryptocurrencies traded in 2021. Which means the relative share of illicit actions has dropped to a report low.

“The yearly developments recommend that . . . crime is changing into a smaller and smaller a part of the cryptocurrency ecosystem,” Kim Grauer, director of analysis at Chainalysis, wrote within the report.

“With the expansion of authentic cryptocurrency utilization far outstripping the expansion of felony utilization, illicit exercise’s share of cryptocurrency transaction quantity has by no means been decrease, at 0.15 per cent,” Grauer added. In its earlier examine, Chainalysis estimated that 0.34 per cent of cryptocurrency transactions had been made for illegitimate causes.

Regardless of the development, cryptocurrency markets stay extremely dangerous for buyers. Scams involving cryptocurrencies value buyers $7.8bn in whole and roughly $3.2bn price of cryptocurrency was stolen in 2021, a 516 per cent enhance over the earlier yr.

In January, illicit addresses held greater than $10bn price of cryptocurrency, Chainalysis calculated.

Regulation enforcement and regulators have grow to be higher at tackling crimes involving bitcoin and different cryptocurrencies however they’re taking part in catch-up with new markets resembling decentralised finance, or DeFi, which current alternatives for criminals to launder cash and steal funds.

Greater than $100bn of funds are locked into DeFi markets, the place algorithms deal with all transactions and there’s no human interplay between events. The fivefold progress of this house final yr has supplied a wealthy looking floor for thefts and scams resembling “rugpulls”, the place scammers persuade buyers to place cash into a brand new token earlier than disappearing.

These scams value buyers $2.8bn final yr. Theft has additionally proliferated, with some $2.2bn of funds stolen from DeFi venues, a rise of 1,330 per cent from 2020. One instance was the $600m breach of the Polygon Community, which the hacker dubbed Mr White Hat later returned.

Elliptic, one other specialist cryptocurrency information firm, calculated in November that buyers misplaced $12bn of funds in DeFi markets final yr.

“As DeFi has continued to develop, so too has its difficulty with stolen funds . . . We’ve additionally seen vital progress within the utilization of DeFi protocols for laundering illicit funds,” the report from Chainalysis mentioned.

In late October, the Financial institution for Worldwide Settlements took step one in the direction of bringing DeFi markets beneath regulatory supervision by outlining plans to make operators of such venues adjust to anti-money laundering guidelines.

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