Cryptocurrency Illicit Transactions Reach Record High

Illicit cryptocurrency transactions are at an all-time high, exceeding $31.4 billion in 2022.

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That’s about $3 billion more than a year earlier, despite the biggest stock market crash in history.

A study by Chainalysis acknowledged that 2022 was one of the most turbulent years in the history of cryptocurrencies, with several large companies “exploding”.

Of the $31.4 billion in illicit transactions, 44% were related to activities associated with entities sanctioned by the US Office of Foreign Assets Control.

A typical example is Garantex, a Russian virtual currency exchange that was sanctioned by OFAC in April 2022 for facilitating illegal activities.

The Hydra darknet marketplace was also sanctioned and shut down by the authorities in 2022.

In addition, this year saw an increase in the number of hackers stealing cryptocurrencies, which increased by 7% year on year.

Other criminal activities include, but are not limited to, dark web tokens, ransomware, child exploitation materials, and terrorist financing.

But most of those subcategories have shrunk this year, said Chainalysis cybercrime researcher Eric Jardine.

“We have seen in the past that cryptocurrency scams, for example, generate less revenue. [when the market drops] probably because users are more pessimistic and less likely to believe fraudulent promises of high returns at a time when asset prices are falling,” the report says.

“If you see a bear market reversal and we enter a crypto bull market phase, my guess is that many of the types of crime that we have seen will increase significantly, especially those that are conditionally market sensitive,” Jardine said.

Despite the record level of illegal transactions, illegal activity still makes up a tiny percentage of all transactions – 0.24%.

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