The stunning growth of cryptocurrency markets in 2021 also came with an 80% rise in crypto crimes, new analysis shows
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The cryptocurrency market saw stunning growth in 2021 as coins from bitcoin to dogecoin hit record highs. But along with this rally came a steep rise in illicit activity, a new study from Chainalysis shows.
In 2021, crypto-based crimes hit a new all-time high with illicit addresses receiving $14 billion, nearly 80% higher compared to the $7.8 billion seen in 2020.
However, the crypto analytic and forensics firm also pointed out that total crypto transaction volume also ballooned 550% to $15.8 trillion last year.
«The amount of legitimate activity grew much faster than the amount of criminal activity,» Kim Grauer, head of research at Chainalysis, told Insider. She added that given the growth of the space, the increase in crimes has never been smaller in comparison to legal transactions.
Still, illicit activities continued to be rampant. And criminal abuse of digital assets threatens broader institutional adoption as regulators all over the world clamp down on crypto, Chainslysis said.
Crimes that Chainalysis observed in 2021 included the ongoing threat of ransomware and NFT-related frauds. But two other trends in particular stood out last year: scamming and stealing funds, with decentralized finance being the common denominator.
Chainalysis
Scamming
The value of crypto that scammers duped from victims totaled $7.8 billion in 2021 — an 82% rise compared to 2020. More than $2.8 billion of this amount came from rug pulls, a new type of scam in which creators quickly cash out their gains after developing what seemed like a legitimate token.
This scam was laid bare when the top boss of Turkish crypto exchange Thodex fled Istanbul, leaving almost 400,000 unable to access
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