According to reports, transactions involving sanctioned firms grew more than 100,000 times in 2022 and accounted for 44% of all illegal activities in 2017.
Data from blockchain analytics company Chainalysis revealed on Thursday that illegal cryptocurrency use reached a record $20.1 billion last year as transactions involving organizations subject to U.S. sanctions increased sharply. In 2022, the cryptocurrency industry struggled as risk-taking decreased and several crypto businesses went under. Regulators increased requests for more consumer protection as a result of the significant losses suffered by investors.
Despite a decline in total crypto transaction volumes, Chainalysis reported that the value of crypto transactions involving illegal activities increased for the second year in a row. According to Chainalysis, transactions involving sanctioned organizations grew more than 100,000 times in 2022 and accounted for 44% of all illegal activities in 2017.
Much of 2022’s unlawful volume was made up of funds received through the Russian exchange Garantex, which the U.S. Treasury Department sanctioned in April. Chainalysis said that the majority of the activity was “likely Russian users utilizing a Russian exchange.” Wallets are labeled as “illicit,” according to a Chainalysis spokeswoman if they are a part of an approved company. An email request for comment from Garantex did not receive a response right away.
According to Chainalysis, “the market slump may be one cause for this.” We’ve discovered in the past, for example, that cryptocurrency scams make less money during weak markets. According to Chainalysis, the $20.1 billion estimate only accounts for transactions that are visible on blockchains and leaves out “off-chain” crimes like false accounting by cryptocurrency companies.
According to Chainalysis, the statistic does not include instances in which cryptocurrency is used as payment for non-crypto crimes, such as drug trafficking, or when it is the profits of such crimes. The paper noted that the number for 2021 was raised from $14 billion to $18 billion as additional scams were uncovered. “We have to emphasize that this is a lower bound estimate – our measure of unlawful transaction volume is expected to expand with time,” it added.
