Cryptocurrency-based crime hit an all-time high in 2021 as total legal payments also hit an all-time high, data group Chainalysis revealed on Thursday.
Criminal transactions, involving bitcoin and its colleagues, totaled $14 billion, up 79 percent from 2020, according to the group’s analysis.
The total number of cryptocurrency payments, meanwhile, rose 567 percent to $15.8 trillion year-over-year, Chainalysis said, as the sector received strong support from traditional finance.
“Given that roaring adoption, it’s no surprise that more cybercriminals are using cryptocurrency,” the group concluded.
“In fact, with the growth of legitimate cryptocurrency use far outpacing the growth of criminal use, the share of illicit activity in cryptocurrency transaction volume has never been lower.”
Illegal transactions amounted to 0.15 percent of the total.
Despite the lower rate, “criminal misuse of cryptocurrency creates huge barriers to further adoption, increases the likelihood of restrictions imposed by governments, and worst of all victimizes innocent people around the world,” the report points out.
According to Chainalysis, the growth in scams last year was 82 percent.
“Rug pulls” played an important role, it noted. This is when investments, especially in newer cryptocurrencies, suddenly disappear.
This was the case last year with “Squid coin”, inspired by Netflix hit “Squid Game”.
The makers of Squid coins disappeared from social media and so did investor profits, following in the wake of other cryptocurrency scams.
“A promising development in the fight against cryptocurrency-related crime is the growing ability of law enforcement to seize illegally obtained cryptocurrency,” Chainalysis said.
At the same time, illegal addresses currently contain at least $10 billion worth of cryptocurrency, according to Chainalysis.
“Much of this value comes not from the original amount derived from criminal activity, but from subsequent price increases in the held crypto assets.”
However, cryptocurrencies are highly volatile and the value of industry leader bitcoin has fallen sharply in recent days.