Growth of illegal crypto payments is increasing
2023.01.12 09:24
Growth of illegal crypto payments is increasing
By Tiffany Smith
Budrigannews.com – 2022 set the record for illicit on-chain transactions, leaving aside the criminal investigations of failed cryptocurrency businesses like FTX, Celsius, 3AC, Terra, and others. In the previous year, illicit addresses received a total of $20.1 billion in cryptocurrency, according to a Chainalysis annual report that was released on January 12.
The figures are not final because, as the analysts discover new addresses associated with criminal activity, the measure of illicit transaction volume grows over time. In addition, it does not include the proceeds of non-crypto native crimes like drug trafficking or the funds on the balance of those failed businesses, which are currently the subject of investigations in a number of jurisdictions worldwide.
The total value of $20.1 billion at this point is slightly higher than the equivalent value in 2021, which was $18 billion. Nevertheless, it remains a record and significantly surpasses the $8 billion threshold for 2020 (by 60%).
The fact that sanctioned entities account for 44% of illicit transactions in 2022 can be explained by the fact that the United States Office of Foreign Assets Control (OFAC) implemented some of its “most ambitious and difficult-to-enforce” crypto sanctions last year. Due to scaling issues, sanctions-related transaction volume could not even be included in the graphs. Chainalysis rates this expansion at 10% million.
The crypto exchange Garantex is cited as an illustration in the report. While it was listed on the OFAC sanctions register in April, this Russian platform continued to function, and in 2022, it hosted the majority of sanctions-related transaction volume.
According to Eric Jardine, Chainalysis’s Cybercrime Research Lead, the report considers wallets to be “illicit” if they are a part of a known illicit entity, such as a sanctioned platform or darknet market. If funds stolen in a hack are stored in personal or unhosted wallets, those wallets may be labeled as illicit. However:
“The transaction volume would be considered “illicit” because it involves funds received by an illicit entity,” but “if a personal/unhosted wallet sent money to Tornado Cash after its designation, that wallet would not be tagged as illicit for that activity.”
The National Cyber Crime Unit (NCCU) of the United Kingdom established a cryptocurrency unit to investigate cryptocurrency-related cyber incidents in the country at the beginning of January. In light of the government’s call to eliminate “dirty money” in the country, this action aims to increase enforcement focus on crypto assets in the UK.
