Illegal cryptocurrency payments hit record $14B last year

Cryptocurrency-based crime hit a record high in 2021 as overall legal payments also reached an all-time peak.

Criminal transactions, involving bitcoin and its peers, totalled $14 billion, up 79 percent from 2020, according to an analysis by data group, Chainalysis, on Thursday.

Total cryptocurrency payments meanwhile rocketed 567 percent to $15.8 trillion year-on-year, Chainalysis said, as the sector won some strong support from traditional finance.

"With the growth of legitimate cryptocurrency usage far outpacing the growth of criminal usage, illicit activity's share of cryptocurrency transaction volume has never been lower," the group said.

Illicit transactions amounted to 0.15 percent of the total while growth in scams was 82 percent last year, according to Chainalysis.

Despite the lower percentage, "criminal abuse of cryptocurrency creates huge impediments for continued adoption, heightens the likelihood of restrictions being imposed by governments, and worst of all victimises innocent people around the world", the report stressed.

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Fight against cryptocurrency-related crime

"Rug pulls" played a sizeable part, the report noted. 

This is when investments, notably in newer cryptocurrencies, suddenly disappear.

"One promising development in the fight against cryptocurrency-related crime is the growing ability of law enforcement to seize illicitly obtained cryptocurrency," Chainalysis said.

At the same time, illicit addresses currently hold at least $10 billion worth of cryptocurrency, according to Chainalysis.

Cryptocurrencies are highly volatile, however, and the value of sector-leader bitcoin has fallen sharply in recent days.

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