A record $14B flowed to criminal crypto addresses in 2021, up from $7.8B in 2020, driven by DeFi scams; total crypto transaction volume hit $15.8T, up 567% YoY
it leaves many exposed; see damage scammers did in #web3 https://www.cnbc.com/... @chainalysis : THREAD: Here are a few key insights from today's preview of our 2022 Crypto Crime Report, recapping the trends that matter as we kick off the new year. https://twitter.com/... https://twitter.com/... @chainalysis : Want a sneak preview of our 2022 Crypto Crime Report? Read the intro here for a summary of the most important trends: huge increases in scamming and hacking, growth of criminal wallet balances, and DeFi taking on a bigger role. https://blog.chainalysis.com/ ... RickBakas.sol / @rickbakas : Scammers and ruggers ran rampant in 2021 smh https://www.cnbc.com/... Emily Peck / @emilyrpeck : So, yeah, I wrote about crypto, debunking the still common notion that it's mostly for doing straight-up crimes https://www.axios.com/...? Dare Obasanjo / @carnage4life : One trope that we can put to bed is that crypto is primarily used by criminals for ransomware & rug pulls. According to Chainalysis only 0.15% of crypto transactions were due to known criminal activity ($14 billion out of $15.8 trillion). Down from 2020. https://blog.chainalysis.com/ ...
ChainalysisHenry Updegrave
Context & Ripple Effects
Chainalysis had already tied 2021's surge in scam losses to DeFi “rug pulls”, in which developers abandon projects. This report broadens that warning from victim losses to the flow of funds reaching known criminal addresses.
The rise came alongside sharply higher overall crypto activity, leaving criminal activity smaller as a share of volume even as its absolute dollar value increased. That distinction matters for assessing whether ecosystem growth is reducing exposure or merely outpacing it.
First-order effects
DeFi users and project participants bear the immediate cost of a scam wave that Chainalysis identifies as a major source of criminal-address inflows.
Chainalysis's figures establish that known criminal flows grew in dollar terms in 2021 despite falling to 0.15% of total crypto transaction volume.
Second-order effects
Exchanges become a critical downstream control point: the subsequent money-laundering analysis found they received 47% of laundered cryptocurrency in 2021, concentrating pressure to identify proceeds from scams.
DeFi's role in generating scam proceeds also makes it a larger part of the compliance and tracing challenge, not solely an origin point for high-risk projects.
Third-order effects
If illicit activity continues to scale with crypto usage, the legitimacy challenge shifts from proving that crime is a large share of volume to building controls that work at much larger absolute transaction values.
The trend: Crypto's legitimacy gap is increasingly defined by the absolute scale and changing routes of illicit funds, even when criminal activity declines as a percentage of total volume.
I am suspicious of all of Chainalysis' numbers as their business model centers around publishing scary reports, but even by their own numbers the percentage of illicit crypto transaction is tiny and shrinking. more here: https://www.axios.com/... https://twitter.com/... https://t…
new chainalysis report confirms once again that illicit use of cryptocurrency is a minuscule part of its overall volume only 0.15% in 2021 https://www.axios.com/... https://twitter.com/...
I'm glad this fact is penetrating mainstream consciousness, but the word “actually” in this headline tells us how much work there's left to be done. https://www.axios.com/... https://twitter.com/...
If you're a crypto fan you can look at this chart and be of two minds: “Good. Not many illicit transactions.” “Bad. The point is uncensored transactions, not speculation. If criminals aren't using it, then neither are dissidents.” via https://blog.chainalysis.com/ ... https://twi…
“Scammers took home a record $14 billion in cryptocurrency in 2021, thanks in large part to the rise of decentralized finance (DeFi) platforms.” “Losses from crypto-related crime rose 79% from a year earlier, driven by a spike in theft and scams.” https://www.cnbc.com/...
If you're tempted to dismiss these statistics, remember this is a company that gets a lot of revenue from law enforcement/agencies. The number they found is contrary to their own interests. https://twitter.com/...
One promising development amidst all this: Law enforcement's growing ability to seize cryptocurrency from criminal wallets. We saw several examples throughout the year, including IRS-CI, who seized $3.5B worth of crypto in 2021. https://blog.chainalysis.com/ ...
On the one hand, breaking the narrative that only criminals use cryptocurrency is great. On the other.. I wonder how incorrect this is due to them not being able to trace #Monero and so excluding the majority of DNM usage. Monero is not mentioned at all. https://blog.chainalysis.…
This is not good. I have my fair share of issues with Web3. Not everyone should be “Self-sovereign” (the hallmark of “DeFi” not everyone wants to be their “own bank” —it leaves many exposed; see damage scammers did in #web3 https://www.cnbc.com/...
THREAD: Here are a few key insights from today's preview of our 2022 Crypto Crime Report, recapping the trends that matter as we kick off the new year. https://twitter.com/... https://twitter.com/...
Want a sneak preview of our 2022 Crypto Crime Report? Read the intro here for a summary of the most important trends: huge increases in scamming and hacking, growth of criminal wallet balances, and DeFi taking on a bigger role. https://blog.chainalysis.com/ ...
One trope that we can put to bed is that crypto is primarily used by criminals for ransomware & rug pulls. According to Chainalysis only 0.15% of crypto transactions were due to known criminal activity ($14 billion out of $15.8 trillion). Down from 2020. https://blog.chainalysis.…