Illicit Crypto Transactions Reach All-Time Highs in 2022: Report

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Aside from criminal investigations into bankrupt crypto firms like FTX, Celsius, 3AC, Terra and others, 2022 set the record for illicit on-chain transactions. According to an annual report published by Chainalysis on January 12, the total value of cryptocurrency received by illicit addresses reached $20.1 billion last year.

The figures are not definitive, as the measure of illicit transaction volume increases over time as analysts identify new addresses associated with criminal activity. Additionally, it does not include proceeds of unencrypted crimes like drug trafficking and funds on the balance of these bankrupt companies, which are currently under investigation in various jurisdictions around the world.

At this point, the total value of $20.1 billion exceeds the same metric in 2021 ($18 billion) by just 10%. However, it still represents an all-time high and significantly exceeds (by 60%) the 2020 markers, which stand at $8 billion.

These figures can be explained by the fact that 44% of illicit transactions in 2022 involve sanctioned entities last year, the United States Office of Foreign Assets Control (OFAC) launched some of its most ambitious crypto sanctions and the most difficult to apply. The volume of sanctions-related transactions increased so drastically that it could not even be included in the charts due to scaling issues. Chainalysis estimates this growth at the 10% million mark.

Related: Sanctions Couldn’t Unplug Tornado Cash: Chainalysis

The report cites an example from crypto exchange Garantex. This Russian platform continued to operate while listed on OFAC’s sanctions registry in April, and it hosted the majority of sanctions-related transaction volume in 2022.

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As Eric Jardine, head of cybercrime research at Chainalysis, explained to Cointelegraph, the report considers wallets illicit if they are part of a known illicit entity, such as a darknet market or trading platform. sanctioned form. Personal or non-hosted wallets can be labeled as illicit if they contain funds stolen during a hack. However:

If a personal/non-hosted wallet sent money to Tornado Cash after it was designated, that wallet would not be labeled as illicit for that activity, but the transaction volume would be considered illicit because it involves funds received by an illicit entity .

In early January, the UK’s National Cyber ​​Crime Unit (NCCU) launched a Cryptocurrency Unit to investigate cyber incidents in the UK involving the use of cryptocurrencies. the country.

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