In 2020, cryptocurrency-based crime dropped dramatically. This is the conclusion that the blockchain investigation firm Chainalysis came to after processing the statistics of the previous year. Yet it would be premature to relax: this fact does not mean that the criminals abandoned the crypto industry for good. Most likely, they will keep using it for their nefarious purposes, taking advantage of the anonymity principle.
The Essence of the Insights
According to the data gathered by the Chainalysis team, in 2019, illegal activities accounted for 2.1% of all cryptocurrency transactions. That equaled approximately $21.4 billion. But the next year, this indicator plummeted to 0.34%, which equals around $10.0 billion in transactions.
Should we be happy because crypto owners became more law-obedient? Not quite. The Chainalysis experts state that fewer crimes are being committed in the industry indeed. Yet the number of legit transactions has also increased significantly. The overall economic activity in the crypto sphere almost tripled between 2019 and 2020. More and more people realize that cryptocurrencies are a convenient and reliable method of payment. They begin using them for their daily needs, they purchase tokens for investment purposes and for sending funds to recipients abroad, avoiding large commissions. So even if the number of crypto-related crimes had remained at the same level, their share of the total number of transactions would have declined anyway.
In 2020, no large-scale crypto scams took place. In 2019, by contrast, gullible victims lost over $2 billion on the notorious PlusToken Ponzi scheme. However, we should not come to the conclusion that such scams will not occur in the future. It might happen so that in a couple of years someone will come up with another scheme and will be able to fool thousands of people. So far, scams account for 54% of crypto-related crimes.
The runner-up in the rating of the most massive offenses in the crypto sphere are dark markets. Their share grew from $1.3 billion worth of activity in 2019 to $1.7 billion in 2020.
And what about ransomware? This is where many potential problems can come from. Today, cryptocurrency-based crimes that involve ransomware account only for 7% of all funds received by criminal addresses. This equals approximately $350 million worth of cryptocurrency. Yet if compared to 2019, the number of such offenses skyrocketed by 311%. The Chainalysis team warns that the real numbers might be even higher because not all victims report to the police.
It is hard to predict whether the frequency of ransomware attacks will keep growing or it is just a short-term trend. Because of the pandemic, people had to work from home. The level of protection of their home computers was considerably lower than in their offices. But once they come back to their usual workplace, the IT departments of their organizations will take proper care of their cybersecurity.
The above-said facts and statistics do not mean that cryptocurrency has become an entirely safe sphere. But it is definitely becoming safer. If people act reasonably and take precautions, they will be able to noticeably reduce their risks.
What Is Chainalysis and What Do They Specialize in
Chainalysis is a blockchain analysis business that provides information, software and services to its clients. Its customers are governmental bodies, exchanges, financial institutions, insurance and cybersecurity organizations from more than 50 countries. Chainalysis offers them investigation, compliance and risk management instruments to solve cybercriminal cases and increase consumer access to the safe usage of cryptocurrencies. The headquarters of the organization is based in New York. In 2020, the Forbes magazine included Chainalysis into the list of top 50 fintech companies.