Crypto crime hits all-time high of at least $20.1 billion in 2022

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Floating Point Group co-founder Kevin March discusses whether cryptocurrencies may prove to be a valid business model after the FTX scandal on “The Claman Countdown.”

Cryptocurrency markets may have been beaten last year, but the popularity of digital tokens with criminals has hit a new high, according to a new analysis.

A study published Thursday by blockchain data platform Chainalysis shows that the volume of illicit transactions using digital currencies reached an all-time high of $20.1 billion in 2022 – and the report pointed out that the figure is low.

Crypto crime hit an all-time high in 2022, a new study has found. (Photo Illustration by Chesnot/Getty Images/Getty Images)

“This year marked a new all-time high for illicit crypto activity, with volumes reaching $20.1 billion,” Kim Grauer, director of Chainalysis research, told FOX Business. “It is important to note that this number is a lower estimate that will likely increase as we identify new addresses associated with illicit activity. Even so, illicit activity continues to reflect a small fraction of total cryptocurrency volumes. less than 1%.”

Grauer added, “Central element behind this record number is the US Treasury’s most ambitious crypto sanctions program to date.”

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A significant portion of illicit transaction volume (44%) came from activities associated with sanctioned entities, which saw a 10,000,000% increase from 2021 to 2022 – the majority of which was conducted on the crypto exchange Garantex based in Russia. The platform “was able to continue to operate with impunity,” Chainalysis said, despite approval from the US Treasury Department’s Office of Foreign Assets Control.

Crypto fund theft has also increased year over year, but by a much smaller margin at 7%. Transaction volumes for all other measured crimes – such as terrorist financing, ransomware, human trafficking and scams – all fell.

Treasury Secretary Janet Yellen is pictured. A significant portion of the volume of illicit crypto transactions in 2022 was conducted on sanctioned entities. (iStock/AP)

Still, the report made it clear that it’s likely the 2022 estimate could rise. The initial figure for 2021 found around $14 billion in illicit crypto activity for the year, and that number has now been increased to $18 billion after new crypto scams were uncovered.

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Chainalysis did not include trades allegedly made as part of suspected fraud or off-chain accounting in 2021 that were not prosecuted, such as in the high-profile implosions of several crypto firms like FTX.

U.S. Attorney Damian Williams speaks during a press conference regarding criminal charges against FTX founder Sam Bankman-Fried on December 13, 2022, in New York City. (AP Photo/Julia Nikhinson/AP Newsroom)

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“The bankruptcy and criminal cases associated with these collapses are still ongoing,” the analysts wrote. “So for now, we will leave crime issues to the justice system.”

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