Illegal on-chain cryptocurrency activities reach all-time highs of $20.1B

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According to a recent report by Chainalysis, illicit cryptocurrency on-chain transaction volume has reached $20.1 billion, increasing for the second year in a row.

The report states:

It should be emphasized that this is a lower bound estimate. Illegal volume measurements will steadily increase over time as we identify new addresses associated with illegal activity.

This figure does not include non-cryptocurrency criminal proceeds, such as traditional drug trafficking with cryptocurrency payments.

44% of the $20.1 billion comes from activities related to sanctioned entities. Last year, the US licensed cryptocurrency mixing services Blender and Tornado Cash, claiming they were used to launder billions of dollars out of North Korea.

Additionally, the U.S. Office of Foreign Assets Control (OFAC) has implemented some of the toughest crypto sanctions in 2022. OFAC sanctions are estimated to have cost him $15 million in potential revenue over the past two months.

Decrease in traditional crypto-related crime

On the positive side, transaction volumes related to more traditional cryptocurrency-related crimes such as darknet marketing and terrorism financing have decreased. In contrast, the percentage of stolen crypto assets increased by 7% year-over-year.

Source: Chainalysis

According to Chainalysis, a market slump in 2022 could explain the recession as the crypto market fell below $1 trillion from last year’s $3 trillion. Previous research has shown that cryptocurrency scams are less profitable in bear markets. The report states:

In general, lower amounts in overall cryptocurrency tend to correlate with lower amounts associated with cryptocurrency crime.

It is worth noting that illicit cryptographic activity increased for the first time since 2019, from 0.12% in 2021 to 0.24% in 2022.

Source: Chainalysis

Additionally, cryptocurrency illegal activity is less than 1% of the total. Crypto-related crime increased in 2022, but Chainalysis claimed the trend continued to trend downward.

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