Criminal Usage of Cryptocurrencies Will Drop as More Countries Adopt Security Measures in 2022: Chainalysis

Illicit addresses received $14 billion (roughly Rs. 103,768 crore) worth of cryptocurrencies last year.

By Radhika Parashar | Updated: 14 January 2022 17:37 IST

Criminal Usage of Cryptocurrencies Will Drop as More Countries Adopt Security Measures in 2022: Chainalysis

Photo Credit: Unsplash/ Bermix Studio

Cryptocurrency-based crime hit a new all-time high in 2021, Chainalysis report says

Highlights

Cryptocurrency-based crime hit a new all-time high in 2021
Illicit addresses received cryptocurrencies worth $14 billion
Cash is still most-used method for illicit activities

The year of 2021 witnessed global crypto expansion, but along came several cases of crypto-related crimes that dragged the sector under bad light. The criminal usage of cryptocurrencies will drop around the world, as more governments learn to take advantage of the uncensored transparency that blockchain offers, a new report claims. Blockchain is the underlying technology that supports cryptocurrencies. In its study, research firm Chainalysis has said that the growth of legitimate usage of cryptocurrencies is “far outpacing the growth of its criminal usage”.

Cryptocurrency-based crime hit a new all-time high in 2021, with illicit addresses receiving $14 billion (roughly Rs. 103,768 crore) over the course of the year, up from $7.8 billion (roughly Rs. 57,813 crore) in 2020.

“Across all cryptocurrencies tracked by Chainalysis total transaction volume grew to $15.8 trillion (roughly Rs. 11,71,09,600 crore) in 2021, up 567 percent from 2020's totals. Given that roaring adoption, it's no surprise that more cybercriminals are using cryptocurrency. But the fact that the increase was just 79 percent — nearly an order of magnitude lower than overall adoption — might be the biggest surprise of all,” the report said.

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Transactions involving illicit addresses represented just 0.15 percent of cryptocurrency transaction volume in 2021.

Since crypto transactions are decentralised and untraceable in nature, several governmental authorities around the world have expressed concerns around the unlawful uses of crypto assets. From money laundering to terror financing, the potential misuses of the crypto sector has added to its delayed legalisation.

The report has further highlighted that law enforcement agencies have ramped up efforts to bust and stop the exploitation of the cryptocurrencies from criminals.

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In November 2021, for instance, the US-based Internal Revenue Service (IRS) Criminal Investigations had announced that it had seized over $3.5 billion worth of cryptocurrency in 2021 — all from non-tax investigations. The number represented 93 percent of all funds seized by the division during that time period.

Regardless, the cryptocurrency market rose to $3 trillion (roughly Rs. 2,15,66,720 crore) in 2021, the highest it has even been so far.

In a report last year, Chainalysis had revealed that crypto related scams mooched off over $7.7 billion (roughly Rs. 58,697 crore) from investors in 2021.

Last year, the most common form of scam was the classic rug pull, that took in more than $2.8 billion (roughly Rs. 21,333 crore) worth of cryptocurrency from victims in this year.

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

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Further reading: Cryptocurrency, Crypto Crime, Chainalysis

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More