The revenue generated from cryptocurrency-related crimes fell by more than 50% over the last year
The revenue generated from cryptocurrency-related crime dropped by more than $5 billion last year, signifying a 50% loss from the previous year. These findings were presented in the annual report from the cryptocurrency analysis firm, Chainalysis.
According to the Chainalysis report, cryptocurrency cyber-criminals stole $5 billion in 2020, which is less than the over $10 billion they stole the previous year. Illegal transactions involving cryptocurrencies have declined over the past year.
The total cryptocurrency value sent and received by illicit entities also declined in 2020 compared to the year before. “In 2019, illicit activity represented 2.1% of all cryptocurrency transaction volume or roughly $21.4 billion worth of transfers. In 2020, the illicit share of all cryptocurrency activity fell to just 0.34% or $10.0 billion in transaction volume”, Chainalysis said. However, Chainalysis added that the decline in the percentage of illicit transaction volume is due to the expansion of the overall cryptocurrency economic activity between 2019 and 2020.
Chainalysis listed eight categories of transactions deemed illegal: darknet markets, ransomware, sanctions, terrorism financing, child abuse material, scams, stolen funds and domestic extremism. Amongst them, scam revenue dipped by 71% over the past year. Scam revenue made up most of the illegal cryptocurrency revenue in 2019, thanks to the PlusToken scandal that resulted in investors losing billions of dollars.
The revenue generated from cryptocurrency scams fell by over $2 billion in 2020 compared to 2019. However, darknet markets accounted for $1.7 billion worth of cryptocurrency activity, up from $1.3 billion in 2019.
Last year, scam and darknet markets were the leading categories of cryptocurrency scams. However, one notable increase is in the use of cryptocurrencies in ransomware attacks. The use of cryptocurrencies in ransomware attacks was almost non-existent in 2017 and 2018, but it began to gain traction from 2019. Ransomware-related theft surged by 311% from 2019, with victims losing more than $250 million in 2020 compared to 2019.
Despite the massive increase in the use of cryptocurrencies for ransomware, it still represents a fraction of the total revenue generated from this category. According to some experts, ransomware led to over $20 billion in economic losses last year.
Chainalysis is optimistic that the decline in cryptocurrency-related crime would continue, thanks to recent advancements in regulatory and compliance processes by companies in the sector.