LONDON, Jan 12 (Reuters) – Illicit use of cryptocurrencies hit a record $20.1 billion last year as deals involving companies targeted by U.S. sanctions soared, Reuters showed on Thursday. data from blockchain analytics firm Chainalysis.
The cryptocurrency market floundered in 2022 as risk appetite waned and various crypto firms crashed. Investors have found themselves with significant losses and regulators have stepped up their calls for greater consumer protection.
Even though overall crypto transaction volumes have plummeted, the value of crypto transactions linked to illicit activity has increased for the second year in a row, Chainalysis said.
Transactions associated with sanctioned entities grew more than 100,000-fold in 2022 and accounted for 44% of illicit activity last year, Chainalysis said.
Funds received by Russian exchange Garantex, which was sanctioned by the US Treasury Department in April, accounted for “much of the illicit volume of 2022”, Chainalysis said, adding that most of this activity is “probably Russian users using a Russian exchange”. A Chainalysis spokesperson said the wallets are labeled as “illicit” if they are part of a sanctioned entity.
Garantex did not immediately respond to an emailed request for comment.
The United States also imposed sanctions last year on cryptocurrency mixing services Blender and Tornado Cash, which it said were being used by hackers, including from North Korea, to launder billions of dollars. proceeds of their cybercrimes.
The volume of stolen crypto funds increased by 7% last year, but other illicit crypto transactions, including those related to scams, ransomware, terrorist financing and human trafficking, saw their volumes decline .
“The market downturn may be one of the reasons,” Chainalysis said. “We have seen in the past that crypto scams, for example, yield less revenue during bear markets.”
Chainalysis said its $20.1 billion estimate only includes activity recorded on the blockchain and excludes “off-chain” crimes such as fraudulent accounting by crypto firms.
The figure also excludes when cryptocurrencies are the proceeds of non-crypto crimes, such as when cryptocurrency is used as payment in drug trafficking, Chainalysis said.
“We must stress that this is a lower estimate – our measure of the volume of illicit transactions will certainly increase over time,” the report said, noting that the figure for 2021 has been revised to $18 billion from $14 billion. billions of dollars as more scams were uncovered. .
Reporting by Elizabeth Howcroft Editing by Tomasz Janowski
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