Crypto fraud: $70 billion in illicit transactions in five years

Blockchain fraud: the crypto market has documented illegal transactions totaling nearly $70 billion during the past five years, according to information provided by AltIndex.com. 

See below for all the details. 

Fraud on the rise in the crypto sector: the battle of regulation 

In the previous year, the cryptocurrency world recorded an incredible volume of illicit transactions, reaching a record $20.6 billion, marking the highest value in the history of this market. 

Despite the temporary decline in market conditions, illicit activity related to cryptocurrencies continued to grow for the second consecutive year, bringing the total for the past five years to impressive levels.

Illicit crypto transactions involve transactions related to fund theft, fraud, ransomware extortion, human trafficking, terrorist financing, and activity in dark net markets. 

According to Chainalysis’ Cyber Crime Report 2023, the total volume of such transactions has increased significantly over the past five years.

In 2017, the cryptocurrency industry documented illicit transactions worth $4.9 billion. After a slight allowance at $4.6 billion the following year, this figure nearly tripled to $12.3 billion in 2019. 

Statistics indicate that 2020 saw a 30% reduction in illegal transactions from the previous year. However, there was a reversal from that point, with a significant increase in illicit activity in the market during 2021 and 2022.

Between 2020 and 2021, the total volume of illicit transactions in the cryptocurrency sector more than doubled to $18.1 billion. 

Illicit activity continued its growth in 2022, with the total value of transactions reaching $20.6 billion, showing a massive increase of 308% over five years.

Rising number of sanctioned entities in the crypto world 

During the aforementioned period, there has been a decline in the percentage of illicit transactions compared to total transactions in the cryptocurrency world. 

Five years ago, these transactions accounted for 0.86% of all transactions in this sector. However, last year, this percentage dropped dramatically to 0.24%.

Parallel to the increase in illicit activities in the cryptocurrency world over the past five years, there has been a significant increase in the number of sanctioned entities and addresses.

According to data provided by Chainalysis, 2018 saw the first cryptocurrency-related sanctions by the US Treasury Department’s Office of Foreign Assets Control (OFAC), which designated two Iranian nationals associated with the SamSam ransomware.

Over the next two years, most of the addresses included in the sanctions lists were linked to personal wallets belonging to individuals. In detail, in 2018 there were an average of two addresses per cryptocurrency-related designation, in 2019 four, and in 2020 nine.

However, a significant change occurred in 2021 when OFAC began designating no longer individuals, but complete crypto services. This change led to a significant increase in the number of addresses associated with each sanctioned entity, which reached 35 in 2022.

Some of these designations even included more than 100 cryptographic addresses as identifiers. 

Over this period, the number of entities involved with cryptocurrencies and subject to sanctions has increased significantly, from two in 2018 to ten in the past year. 

In addition, data collected by Chainalysis revealed that over the past five years, scams have been the main source of revenue for cryptocurrency-related criminal activities, followed by operations related to stolen funds and the darknet market.

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