Crypto boomed in 2021 and so did the crypto wealth of criminals
India Today
Cryptocurrencies have long been the safe haven for cybercriminals. A recent report showing an enormous rise in crypto assets related to illicit activities is proof of that. However, there is an important trend that has emerged in the midst.
A new report maps the effect of the cryptocurrency boom last year on the total crypto holdings tied to criminal activities. The report highlights that the crypto assets of cybercriminals rose to $11 billion by the end of 2021, as opposed to just $3 billion at the end of the previous year. The meteoric rise is accredited to both higher illicit income from cybercrime as well as the rise in the value of cryptocurrencies over the period.
The data has been shared in a report by Chainalysis, a US-based blockchain data company. First spotted by The Verge, the report shows that the most profitable crime was theft. Out of the total assets mapped to illicit activities, $9.8 billion were made up of crypto coins stolen from digital wallets.
The amount accounted for 93 per cent of the total criminal activity-related funds. Darknet market funds at $448 million formed the next biggest percentage, followed by scams at $192 million. Fraud shops accounted for $66 million of the total amount, while the illicit amount from ransomware stood at $30 million.
In a blog revealing the findings, Chainalysis also mentions that a total of 4,068 criminal whales hold over $25 billion in cryptocurrency, garnered from a multitude of unlawful sources. It seems odd, as the number does not match up with the total crypto assets of criminals in 2021 as mentioned above.
That is until you have a look at how Chainalysis defines criminal whale accounts. A cryptocurrency whale is a private account that holds more than $1 million in crypto assets. Chainalysis then classifies a criminal whale if a whale account receives more than 10 per cent of its funds from illicit addresses. Hence, the $25 million worth of crypto assets of criminal whales is not balanced with the overall criminal balance in 2021, i.e. $11 billion.
The report highlighted another important trend. It found out that criminals having their ill-gotten funds stored as crypto assets attempted to liquidate them faster as compared to the previous year. "Average holding times are at least 75% shorter than the all-time figures in all categories," the report mentions. Ransomware operators, for instance, held on to their funds for just 65 days on average before liquidating.
The report mentions that the decrease in holding time may be a result of the mounting pressure from global law enforcement agencies. Several examples of the same came to light recently. The US Department of Justice, for instance, recently recovered over $3.6 billion in cryptocurrency linked to the Bitfinex heist in 2016. Earlier this week, the UK tax department seized three NFTs as part of its investigation into an alleged VAT fraud scheme worth £1.4m.
