Cryptocurrency crime hit an all-time high in 2021

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The amount of money linked to cryptocurrency-related crime rose nearly 80% last year, but was crowded out by a massive increase in adoption among legitimate users, new figures show.

According to a report by blockchain data platform Chainalysis, illegal addresses received $14 billion worth of cryptocurrency during 2021, up from $7.8 billion a year earlier. However, total trading volume across all cryptocurrencies increased by 567% from 2020 highs, totaling $15.8 trillion.


While illicit transaction volume should not be underestimated, the fact that the increase is “almost an order of magnitude compared to total adoption” is the biggest surprise, says Chainalysis. Overall, transactions with invalid addresses accounted for only 0.15% of total traffic.

However, the Chainalysis team said that this percentage is susceptible to change as new information comes to light. “As Chainalysis identifies more addresses associated with illicit activity and includes their transactional activity in our historical versions, this figure is likely to increase,” the report said.

pulling the rug

Most of the illegal transactions were linked to scams, either in the form of identity theft or other forms of scheme. Last year scam revenues increased by more than four-fifths (82%) to reach $7.8 billion, of which more than $2.8 billion came from so-called rug pulling.

Rag pull is a type of scam whereby scammers go to great lengths to present themselves as legitimate projects with high potential. However, once victims have invested their money, they simply grab it and leave.

The Rogue Pull loss figures only represent the value of stolen investor funds, and do not account for subsequent loss of value in the fraudulent tokens after Rag Pull. Typically, after scammers disappear, the token loses all its value almost immediately.

Decentralized finance (DeFi) projects were involved in nearly half of all rag bridges tracked by Chainalysis last year. Chainalysis also said that almost all of the value lost in 2021 (90%) from Rag Pull came from Thodax, a fraudulent exchange whose CEO went missing.

Malware is often used for crypto scams, with fake wallets and exchange apps frequently popping up on the web.

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