Crypto crime doubled in 2022
Sanctions violations have driven much of the uptick, according to Chainalysis.
Sanctions violations have contributed greatly to the uptick, according to Chainalysis, the American analytics firm.
Criminal transactions doubled in 2022 across the crypto space. This comes from a recent report from the U.S. analytics company Chainalysis. According to the report, the share of illegal transfers rose from 0.12% to 0.24%. The new figure: $20.1 billion.
The record value is surprising, because Chainalysis generally tracked a decline in current criminal categories like terrorist financing, fraud, or ransomware. Only thefts rose by 7% versus 2021. Chainalysis attributes the overall decline in part to weak market conditions. The bears have made investors more pessimistic about price prospects.
Still, criminal activity rose again for the first time since 2019. Chainalysis sees an uptick in sanctions violations. They accounted for 44% of total illicit transfers. Compared with the previous year, this means an increase of more than ten million percent. This means sanctions violations nearly single-handedly drove the overall rise.
According to Chainalysis, the Russian crypto exchange Garantex accounted for the majority of sanction-related transfers. OFAC, the U.S. Treasury’s sanctions watchdog, put the service on the blacklist in April 2022.
2022: A sanctions year
It should not be surprising that these sanctions violations accounted for the majority of illicit activity in 2022. Regulators tried to curb criminal activity in crypto with sometimes sweeping interventions. On one hand, a ban on mixer providers Tornado Cash and Blender.io, imposed as a measure against North Korean hackers Lazarus. On the other, sanctions on Russia following the invasion of Ukraine. For example, in October the EU issued a general ban on crypto service providers to Russian users.
The numbers look rising at first glance. Yet the criminal scale seems small compared with fiat money. Even regarding money laundering alone, there is a huge gap between the two worlds. In 2021 Chainalysis estimated that about $8.6 billion in Bitcoin and other cryptocurrencies flowed into the legitimate economy. At the same time, the Vienna-based United Nations Office on Drugs and Crime estimates in a report that global money laundering amounts to two to five percent of world GDP. That means between $800 billion and $2 trillion is laundered each year. Read more here.
