•Illegal on-chain cryptocurrency activities have reached an all-time high of $20.1 billion.
•Forty-four percent of the $20.1 billion in illegal cryptocurrency transactions came from sanctioned entities.
•Conventional cryptocurrency-related crimes such as darknet marketing and terrorism financing decreased, while the percentage of crypto funds stolen increased by 7% YOY.
The world of cryptocurrency is becoming increasingly lucrative, but with that comes an increased risk of criminal activity. According to a recent report by Chainalysis, illegal on-chain cryptocurrency activities have reached an all-time high of $20.1 billion. This figure is a lower-bound estimate, and it does not include proceeds from non-crypto native crimes, such as conventional drug trafficking involving cryptocurrency payments.
Of the $20.1 billion in illegal cryptocurrency transactions, 44% came from sanctioned entities. Last year, the U.S. sanctioned cryptocurrency mixing services Blender and Tornado Cash, alleging they were used to launder billions of dollars from North Korea. The U.S. Office of Foreign Assets Control (OFAC) also implemented some of its most severe crypto sanctions in 2022, costing cybercriminals an estimated $15M in potential revenue in the past two months.
On a positive note, the volumes of transactions related to more conventional cryptocurrency-related crimes, such as darknet marketing and terrorism financing, decreased. In contrast, the percentage of crypto funds stolen increased by 7% YOY. This increase is likely due to the rise of crypto scams, such as fake crypto exchanges, fake crypto investments, and crypto giveaway scams.
To combat this, governments and financial institutions have been increasingly taking action to regulate the crypto space. For instance, the U.S. Financial Crimes Enforcement Network (FinCEN) has issued new rules that require crypto exchanges and other financial institutions to report suspicious activities. This move is aimed at preventing money laundering and other illegal activities in the crypto space.
Ultimately, the fight against illegal cryptocurrency activities will require both the public and private sectors to work together. Governments need to continue to issue regulations and enforce them, while companies should continue to develop and implement anti-money laundering (AML) and know-your-customer (KYC) technologies. With both sectors working together, we can ensure that the cryptocurrency space remains a safe and secure place for everyone to transact.