Study Shows Crypto Crime Record Hit $14 billion In The Year 2021
Cryptocurrency crimes totaled $14 billion last year, according to research by blockchain analytics firm Chainalysis published on Tuesday.
The report, which surveyed over 1,000 law enforcement agents around the world who are familiar with digital currencies, found that cryptocurrency crimes increased by 74 percent in 2018 compared with the previous year. It also showed a 131 percent increase from 2016 to 2017.
Chainalysis said bitcoin’s share of crime-related transactions decreased to 78 percent in 2018 from 85 percent in 2017. Ethereum and Monero were identified as the other most commonly used cryptocurrencies because they provide more anonymity than bitcoin. The emergence of privacy coins is driving their use for criminal purposes, according to Chainalysis.
“Privacy coins are definitely making up an increasingly larger share of the market,” said Jonathan Levin, co-founder of Chainalysis. “These are coins that have the ability to completely obfuscate transactions so it’s not apparent on a blockchain where funds are moving.”
The survey asked law enforcement agents in countries including Australia, France and Japan which cryptocurrencies criminals were using most often. Respondents also said there was little difference between how criminals used privacy coins versus bitcoin for illicit activity.
Crime types investigated included hacking (35 percent), exchanges (20 percent), ransomware (16 percent) and darknet markets (eight percent). The remaining 12 percent related to other crimes such as theft, drug dealing or payments for criminal services like assassinations.
Increased sophistication in crime also meant hackers increasingly preferred to take control of devices and use them for illegal purposes, such as using webcams to record individuals through their computer screens.
In one case cited by the report, a woman in New Zealand was unknowingly being filmed while opening a message on Facebook Messenger that appeared to come from a friend’s phone number. When she tried to close the app, her entire laptop screen went black and a demand for money appeared demanding a $300 ransom not to have the private images distributed.
Law enforcement agents said scammers were increasingly turning away from initial coin offerings (ICOs) because of increased regulatory scrutiny and bad publicity. Instead they preferred initial exchange offerings (IEOs), where investors paid directly to an exchange with fiat currency in return for tokens which they could trade on the exchange once the IEO was completed.
Efforts by exchanges to comply with regulations and introduce financially sound practices have driven this shift, Chainalysis said, noting that a “decentralization hangover” following a period of rapid growth meant some bad practices were still rife in the market.
In addition, CoinMarketCap data published on Tuesday showed cryptocurrency markets have been trading sideways for most of 2019 so far. The total market capitalization has hovered around $215 billion since January 10 without any major moves either up or down. This is largely unchanged from where it started at the beginning of last year.
The price volatility seen between December 2017 and January 2018 when bitcoin rose to almost $20,000 before dramatically falling back down has not been seen since.
On Tuesday, bitcoin fell 1.5 percent to $4,253 while ether dropped 2 percent to $151.