2022 was the biggest year yet for crypto, if you’re a scammer

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There are plenty of people who bought into the crypto hype of 2021 early in 2022, only to get burned by hacks, scams, or rug pulls over the past year. Image: Vitalii Vodolazskyi ( Shutterstock)

Even though the crypto industry has taken a beating over the past year, both in terms of declining crypto prices and declining public opinion, scammers, hackers and sanctioned entities have still managed to bring about a good deal of change in 2022.

Crypto analyst firm Chainalysis released its Crime Trends Report for the year 2022 on Thursday. Immediately it becomes clear that despite the ongoing crypto winter and falling digital currency prices, scammers, hackers and those dealing with sanctioned entities earned $20.1 billion in illicit proceeds. This metric is about $2 billion more than in 2021 and $12 billion more than in 2020, according to Chanalysis metrics.

Of course, this figure is subject to change as more scams and proceeds of illicit activity become known. The analytics firm noted that although it initially identified around $14 billion in crypto received by addresses linked to illicit wallets, it uncovered an additional $4 billion over the following months as researchers uncovered previously unknown scams.

The analysis revealed that activity associated with sanctioned entities accounted for 44% of all illicit transaction volume. The company explained that this was due to the US Office of Foreign Assets Control, the enforcement arm of the US Treasury Department, and its crackdown on trade dealing with sanctioned countries. In particular, OFAC sanctioned Russian exchange Garantex in April, alleging it was laundering money for ransomware operations.

OFAC also became a punching bag in crypto circles last year after the agency sanctioned crypto mixer Tornado Cash, adding it to the 10 entities sanctioned by US authorities.

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At the same time, the amount of revenue generated from hacks, scams and ransomware was lower than last year. As noted by Chainalysis, this could be due to the decline in the price of crypto across the board, and they allege that crypto crime accounts for less than 1% of all transactions. Although the decline in scam profits is not indicative of the fair number of hacks that have taken place since the start of 2022. There have been major attacks like the $620 million Axie Infinity Network hack, which was linked to hackers affiliated with North Korea. The number of attacks against DeFi projects has also increased, especially towards the end of 2022.

Notably, the Chainalysis numbers don’t take into account some of the most failed deals of 2022 like Celsius and FTX, both of which have been accused of massive fraud. Celsius is being sued by the New York Attorney General for allegedly lying about the security of its platforms after the exchange lost billions of dollars in crypto lane this year. And of course, FTX co-founder and ex-CEO Sam Bankman-Fried faces eight counts of fraud and conspiracy for allegedly using and abusing FTX user crypto, among other charges. campaign finance violations. You don’t have to look too far to find users complaining about being drained of their savings.

The cryptanalytic firm claimed that it does not include figures from these companies because their estimates are based solely on on-chain intelligence. Additionally, lawsuits and criminal proceedings are ongoing, so although the entities and their operators have been cited for committing fraud, they still have to spend their day in court.

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