Illegal Crypto Transaction Volumes Reach All-Time High

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More than $20 billion in illegal transactions were made using cryptocurrency last year, a record that is expected to rise as more illicit activity is uncovered, according to Chainalysis.

The blockchain analytics company helps police, government agencies, and other entities track cryptocurrency transactions for compliance, law enforcement, and other purposes.

He claimed to have recorded more illicit funds flowing through blockchains last year than any year before. The figure for 2021 was $18 billion.

However, a large portion (44%) of this money was linked to sanctioned entities, and in particular the Russian cryptocurrency exchange Garantex, which was sanctioned by the Treasury’s Office of Foreign Assets Control (OFAC). American in April 2022.

“Transactions associated with Garantex or any other sanctioned crypto service represent, at the very least, substantial compliance risk for businesses subject to U.S. jurisdiction, including fines and potential criminal charges,” Chainalysis said in introduction to its latest annual report.

In fact, transaction volumes in all other crypto crime categories fell except for “Stolen Funds” which saw a 7% increase.

“The market downturn may be one of the reasons,” the company added.

“We have seen in the past that crypto scams, for example, yield less revenue during bear markets, likely because users are more pessimistic and less likely to believe a scam’s promises of high returns when commodity prices assets decline. In general, less money in overall crypto tends to correlate with less money associated with crypto crime.

That said, the overall share of cryptocurrency activity linked to illegality increased slightly for the first time since 2019 – from 0.12% of overall volumes in 2021 to 0.24% in 2022.

This still makes it a relatively small component of overall cryptocurrency activity. However, Chainalysis did not include “off-chain” criminal activity in its report – where proceeds from drug trafficking and other crimes may have been moved into crypto to be laundered.

The company also warned that its $20.1 billion estimate for 2022 is likely to increase over time as it identifies new addresses.

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