Cryptocurrency crime declined to a small fraction of total trading volume over the past year. However, some targeted hacks boomed as criminals exploited people who worked from home during the pandemic.
Last year, illegal activity accounted for 0.34% of total cryptocurrency transaction volume, according to a report from blockchain data firm Chainalysis. That was a decrease of around 2% in the previous year.
“We saw a significant decrease in the percentage of illegal entities in total activity,” Kim Grauer, research director at Chainalysis, told CNBC. “Still, ransomware was by far the largest category in terms of activity growth and we are seeing an all-time high for market activity on the dark net.”
Ransomware is malicious software that hackers use to infect a computer and then charge a fee to unlock it. This bounty is often paid out in Bitcoin or other cryptocurrencies.
The category accounted for only 7% of all crypto funds received by criminals, but it grew 311% year over year. The chain analysis indicated that more people are working from home as a new security hole for businesses – and as an opportunity for criminals.
Net dark markets were the second largest category of crime, accounting for $ 1.7 billion worth of cryptocurrency activity – an increase of around 30% year over year. The dark network, also known as the dark web, is a network that uses the Internet, but requires special software and permissions to access it.
Chain Analysis Crypto Crime Report
Source: chain analysis
Criminals have turned to cryptocurrencies like Bitcoin for instant online sending.
Cryptocurrencies are also pseudonymous. You can see where the funds have been sent, which makes it easy for companies like Chainalysis to follow up. But you can’t see who sent them.
These features have caught the attention of regulators who fear the potential role of crypto in money laundering and terrorist financing.
President Biden Treasury Secretary Janet Yellen mentioned the potential for abuse in her confirmation hearing earlier this week, which analysts said weighed on bitcoin prices. The US government must “examine carefully how to promote its use for legitimate activities” while “restricting its use for malicious and illegal activities,” Yellen said.
Fraud still accounted for more than half of all cryptocurrency-related crimes, but it has decreased significantly year after year.
Chainlysis’ Grauer said this was due to heightened awareness of events like the PlusToken Ponzi program, which demanded more than $ 2 billion from victims in 2018.
“People learned a bit when they had the get-rich-quick mentality two years ago,” said Grauer. “That could have got people thinking about some of these really big Ponzi plans.”
Bitcoin has established itself as a mainstream investment on Wall Street in the past few months. The world’s largest cryptocurrency was over $ 40,000 in early January, driven by interest from institutions and retail investors that can now buy Bitcoin through payment companies like PayPal.
The cryptocurrency fell below $ 30,000 on Thursday.