Cryptocurrency-related crime fell last year to a small fraction of the total trading volume. But some targeted hacks exploded as criminals exploited people who worked at home during the pandemic.
Last year, illicit activity accounted for 0.34% of the entire volume of cryptocurrency transactions, according to a report by blockchain data company Chainalysis. This fell by around 2% in the previous year.
“We saw a significant decrease in the share of general activity associated with illicit entities,” Kim Grauer, head of research at Chainalysis, told CNBC. “Still, ransomware was by far the largest category in terms of growth in activity and we are seeing a historic record for activity in the dark-net market.”
Ransomware is malicious software that hackers use to infect a computer and then require a fee to unlock it. This reward is usually paid in bitcoin or other cryptocurrencies.
The category accounted for only 7% of all cryptographic funds received by criminals, but increased 311% year on year. Chainalysis pointed to more people working from home as a new vulnerability for businesses – and an opportunity for criminals.
The dark net markets were the second largest category of crime, accounting for $ 1.7 billion in cryptocurrency activities – an increase of about 30% over the previous year. Also known as the dark web, the dark net is a network that uses the internet, but requires specific software and access authorizations.
Chainalysis crypto-crime report
Chainalysis
Source: Chainalysis
Criminals have resorted to cryptocurrencies like bitcoin to facilitate instant online shipping.
Cryptocurrencies are also pseudonyms. You can see where the funds were sent to, making it easier for companies like Chainalysis to track them. But you cannot see who sent them.
These characteristics have caught the attention of regulators who fear the potential role of cryptography in money laundering and terrorist financing.
The nominee for President Biden’s Treasury Secretary Janet Yellen mentioned the potential for misuse at her confirmation hearing this week, which analysts say has weighed in bitcoin prices. The U.S. government needs to “closely examine how to encourage its use for legitimate activities”, while “restricting its use for evil and illegal activities,” said Yellen.
The scams still accounted for more than half of all cryptocurrency-related crimes, but have dropped significantly year after year.
Grauer of Chainlysis said this was due to increased awareness of events such as the PlusToken Ponzi scheme, which took more than $ 2 billion from victims in 2018.
“People learned a little bit about following the ‘get rich quick’ mentality two years ago,” said Grauer. “This may have made people aware of some of these great Ponzi schemes.”
Bitcoin has taken off as the main Wall Street investment in recent months. The world’s largest cryptocurrency reached $ 40,000 in early January, driven by the interest of retail institutions and investors, who can now buy bitcoin through payment companies like PayPal.
The cryptocurrency fell to less than $ 30,000 on Thursday.