Given the roaring adoption of cryptocurrency—it’s no surprise that more cyber criminals are using cryptocurrency. With more countries learning to take advantage of the uncensored transparency that blockchain offers, the criminal usage of cryptocurrencies will drop around the world, claims a new report by data analytics firm Chainalysis.
Blockchain is an underlying technology consisting an open ledger that contains all the transactions ever made, albeit in an anonymous and encrypted form. Bitcoin and the thousands of cryptocurrencies are essentially codes recorded on a blockchain that gets longer and longer as more people use them.
Across all cryptocurrencies tracked by data analytics firm Chainalysis, total transaction volume in cryptocurrency grew to $15.8 trillion in 2021, up 567 per cent from 2020. The report claims that the growth of legitimate cryptocurrency usage will outpace the growth of criminal usage.
According to the report, “transactions involving illicit addresses represented just 0.15 percent of cryptocurrency transaction volume in 2021.” This means that legitimate transactions has already surpassed illicit transactions and the trend will continue in 2022 as well.
Additionally, Chainalysis in its recent report revealed that scammers stole over $14 billion worth of cryptocurrency from victims in 2021 —up by 79 per cent from $7.8 billion in 2020. As of early 2022, Chainalysis said illicit address already hold over $10 billion worth of cryptocurrencies, with the majority of this held by wallets associated with cryptocurrency theft.
It should be noted that the rise in decentralized finance (DeFi) which facilitates crypto-denominated lending outside traditional banking, has been a big factor in the increase in stolen funds and scams.
In another report in December, Chainalysis revealed that at least 36 per cent of the victims lost over $2.8 billion (Rs 280 crores approx.) to ‘rug pull’ cases. A rug pull is a malicious maneuver in the cryptocurrency industry where crypto developers abandon a project and run away with investors’ funds. In total, crypto scams rose by 81 percent this year from 2020 led by rug pulls, the company said in a blog post.
Meanwhile, US Federal Bureau of Investigation (FBI) had issued a warning in November, against cybercriminals that are using Bitcoin ATMs and QR codes to defraud unsuspecting individuals.