llegal crypto activity hit an all-time high of $20.1 billion in 2022, as criminals intensified their efforts to scam unwitting investors.
Setting aside the criminal probes into failing crypto companies like FTX, Celsius, Three Arrows Capital, Terraform Labs, and others, 2022 established the record for illegal on-chain transactions.
The entire cryptocurrency value received by unauthorized addresses last year was $20.1 billion, per a Chainalysis analysis from January 12. The figures aren’t final because the analysts continue to discover new addresses linked to illegal activity, which causes the gauge of illicit transaction volume to expand over time.
Additionally, it excludes money obtained via non-crypto crimes like drug trafficking and money held in the accounts of the aforementioned collapsed businesses, which are currently the subject of investigations in numerous jurisdictions around the world.
Currently, the overall value of $20.1 billion somewhat exceeds the equivalent figure from 2021 ($18 billion) by 10%. Even so, it still sets a record and surpasses the $8 billion benchmark for 2020 by a wide margin (by 60%).
These figures can be justified by the fact that sanctioned entities account for 44% of illicit transactions in 2022: The Office of Foreign Assets Control (OFAC) of the United States introduced some of its “most ambitious and challenging-to-enforce” crypto sanctions last year.
Due to scale limitations, transaction volumes relating to sanctions increased so sharply that they weren’t even able to be displayed on the graphs. Chainalysis places the 10% million threshold for this growth.
The article uses the cryptocurrency exchange Garantex as an example. The majority of sanctions-related transaction volume was hosted on the Russian platform in 2022 even though it was put on the OFAC sanctions registry in April.
The analysis classifies wallets as “criminal” when they are a part of a known illicit entity, such as a darknet market or sanctioned platform, as Eric Jardine, cybercrimes research lead at Chainalysis, noted.
If personal or unhosted wallets contain money that has been taken in a hack, they may be labeled as illegal. However:
“If a personal/unhosted wallet sent money to Tornado Cash after its designation, that wallet would not be tagged as illicit for that activity, but the transaction volume would be considered ‘illicit’ because it involves funds received by an illicit entity.”
The National Cyber Crime Team of the UK established a cryptocurrency unit in early January to look into cyber events involving cryptocurrencies in the country.
With the government calling for the elimination of “dirty money” in the nation, this action attempts to strengthen enforcement focus on crypto assets in the nation.
