Revenues from cryptocurrency-related crime fell by more than 50% over the past year
Revenues generated by cryptocurrency-related crime dropped by more than $5 billion last year, representing a decline of roughly 50% compared with the previous year. These findings are detailed in the annual report from crypto analytics firm Chainalysis.
According to the Chainalysis report, cybercriminals stole $5 billion in cryptocurrency in 2020, down from more than $10 billion the year before. Overall, illicit transactions involving cryptocurrencies decreased during the most recent year.
The total value of cryptocurrency sent to and received by illicit entities also fell in 2020 compared with 2019. “In 2019, illicit activity accounted for 2.1% of all cryptocurrency transaction volume, or roughly $21.4 billion in transfers. In 2020, the illicit share of all cryptocurrency activity fell to just 0.34%, or $10.0 billion in transaction volume,” Chainalysis reported. The company noted, however, that the percentage decline reflects the overall expansion of legitimate cryptocurrency economic activity between 2019 and 2020.
Chainalysis identifies eight categories of transactions it classifies as illicit: darknet markets, ransomware, sanctions evasion, terrorist financing, child sexual abuse material, scams, stolen funds, and domestic extremism. Among these categories, revenues from scams fell by 71% year over year. Scams had accounted for the largest share of illicit crypto revenues in 2019, largely because of the PlusToken scandal that cost investors billions.
Proceeds from cryptocurrency scams declined by more than $2 billion in 2020 compared with 2019. Darknet markets, meanwhile, accounted for about $1.7 billion in cryptocurrency activity in 2020, up from $1.3 billion in 2019.
Last year, scams and darknet markets remained the primary sources of illicit cryptocurrency revenue. At the same time, the use of cryptocurrencies in ransomware attacks rose sharply. Cryptocurrency usage in ransomware was nearly negligible in 2017 and 2018 but began to increase in 2019. Ransomware-related thefts grew 311% since 2019, with victims losing more than $250 million in 2020 compared with 2019.
Despite the steep rise in ransomware activity using cryptocurrencies, it still represents a relatively small portion of total revenue for that category. Some experts estimate that ransomware caused economic losses exceeding $20 billion last year.
Chainalysis expressed optimism that the decline in cryptocurrency-related crime will continue, citing recent improvements in regulatory frameworks and enhanced compliance efforts by firms across the industry.