Illicit on-chain cryptocurrency transaction volume hits all-time highs of $20.1 billion, growing for the second year in a row, according to a recent report by Chainanalysis.
The report said:
We must emphasize that this is a lower estimate – our measure of illicit transaction volume is sure to increase over time as we identify new addresses associated with illicit activity.
The figure does not include proceeds from non-crypto native crimes, such as conventional drug trafficking involving cryptocurrency payments.
Of the $20.1 billion, 44% came from activities associated with sanctioned entities. Last year, the United States sanctioned cryptocurrency mixing services Blender and Tornado Cash, alleging they were being used to launder billions of dollars from North Korea.
Additionally, the US Office of Foreign Assets Control (OFAC) implemented some of its toughest crypto sanctions in 2022. It was estimated that OFAC sanctions cost cybercriminals $15 million dollars of potential revenue over the past two months.
Conventional Crypto Crimes Have Decreased
On a positive note, transaction volumes related to more conventional cryptocurrency-related crimes, such as darknet marketing and terrorist financing, have declined. In contrast, the percentage of stolen crypto funds increased by 7% year-over-year.
The 2022 market downturn could explain the slump since the crypto market went below, according to Chainalysis $1 trillion out of $3 trillion Last year. Previous research showed that crypto scams are less profitable in bear markets. The report said:
In general, less money in crypto tends to correlate with less money associated with crypto crime.
It should be noted that illicit crypto activity increased for the first time since 2019, from 0.12% in 2021 to 0.24% in 2022.
Additionally, illicit activity in cryptocurrency is responsible for less than 1% of the overall volume. Although crypto-related crime increased in 2022, Chainalysis maintained that the trend remained downward.