Cryptocurrency offenses fell last year to a small share of total trading volume. But some of the targeted hacks exploded as criminals exploited people working from home during the pandemic.
Last year, illicit activity accounted for 0.34% of the total volume of cryptocurrency transactions, according to a report by the blockchain data company Chainalysis. It fell from about 2% a year earlier.
“We have seen a significant decrease in the share of global activity associated with illicit entities,” Kim Grauer, head of research at Chainalysis, told CNBC. “However, ransomware has been by far the largest category in terms of business growth and we see a record level for activity in the dark-net market.”
Ransomware is malicious software used by hackers to infect a computer and then charge a fee to unlock it. This reward is often paid in bitcoin or other cryptocurrencies.
The category accounted for only 7% of all cryptographic funds received by criminals, but increased by 311% year on year. Chainalysis pointed to more people working from home as a new vulnerability for companies – and an opportunity for criminals.
Dark net markets were the second largest crime category, accounting for $ 1.7 billion in cryptocurrency activity – an increase of about 30% from a year earlier. Also known as the dark web, the dark net is a network that uses the Internet, but requires specific software and access permissions.
Chainalysis crypto-crime report
Chainalysis
Source: Chainalysis
Criminals have resorted to cryptocurrencies such as bitcoin for ease of sending online instantly.
Cryptocurrencies are also pseudonyms. You can see where funds have been sent, which makes it easier to track companies like Chainalysis. But you don’t see who sent them.
These features have drawn the attention of regulators who fear the potential role of crypto in money laundering and terrorist financing.
The appointment of President Biden’s Treasury Secretary Janet Yellen mentioned the potential for abuse in this week’s confirmation hearing, which analysts say has had an impact on bitcoin prices. The U.S. government needs to “closely consider how to encourage their use for legitimate activities,” while “limiting their use for malicious and illegal activities,” Yellen said.
Scams continued to account for more than half of all cryptocurrency-related crimes, but fell significantly from year to year.
Grain from Chainlysis said that this is due to a greater awareness of events such as the Ponzi scheme PlusToken, which took over $ 2 billion from the victims in 2018.
“People learned a little by following the ‘get rich quick’ mentality two years ago,” Grauer said. “That could have made people understand some of these very big Ponzi schemes.”
Bitcoin has taken off as a major investment in Wall Street in recent months. The largest cryptocurrency in the world exceeded $ 40,000 in early January, spurred by the interest of institutions and retail investors, who can now buy bitcoin through payment companies such as PayPal.
The cryptocurrency fell below $ 30,000 on Thursday.