While several regulators have voiced concerns regarding the use of cryptocurrencies for illicit activities, recent findings have revealed that the revenue generated from crypto crimes has dropped more than $5 billion in 2020.
According to a report from blockchain intelligence firm Chainalysis’, revenue from crimes involving cryptocurrencies has dropped by 53%, with bad actors getting away with approximately $5 billion less than the $10 billion-plus they got away with, in 2019. The reason behind this being increasing regulatory compliance by crypto exchanges and declining scams.
The number of transactions involving illicit crypto funds has also dropped steeply and is down to just 0.34% in 2020, a significant fall from 2.1% of all transactions analyzed in 2019. Among the various categories of transactions that Chainalysis marks as “illicit”, the total amount of crypto amassed by scams saw the sharpest decline, by 71% to $2.6B.
This drop was partly due to the crackdown on the multi-billion dollar PlusToken Ponzi, which is significantly bigger than anything seen in 2020.
Ransomware attacks on the rise
However, not all forms of crypto crimes have diminished. The report states that thefts that involve ransomware have risen 311% from 2019 to 2020, incurring additional losses of more than $250 million in 2020 compared to 2019.
Chainalysis adds that the rise in ransomware attacks was mainly due to “new strains taking in large sums from victims,” and when combined with pre-existing ransomware strains, accounts for nearly $350 million of cryptocurrency theft in 2020.
Even though the ransomware attacks have been distinct and random, the firm believes that the infrastructure attackers need to launder crypto into cash “may be controlled by just a few key players,” just like the origin of the ransomware.
Chainalysis also adds that the increased efforts from exchanges to store personal identifying information have forced criminals to “rely on a surprisingly small group of service providers” to convert the ill-gotten crypto holdings into fiat.
“In the long run, (compliance) efforts by exchanges will also remove some of the incentive to use cryptocurrency in criminal activity, as it will become much harder for cybercriminals to convert cryptocurrency into cash if they can’t use exchanges.”
Despite this, the blockchain analysis firm says the outlook on crypto crimes “has never been better,” as a result of better regulatory and compliance processes. The firm wrote:
“The good news is three-fold: Cryptocurrency-related crime is falling, it remains a small part of the overall cryptocurrency economy, and it is comparatively smaller to the amount of illicit funds involved in traditional finance.”