$14 billion worth of transactions in crypto in 2021 involved addresses described as illicit according to an upcoming report by Chainalysis.
The illicit addresses are thought to be involved in cyber-crimes such as theft, scams and money-laundering.
With the total transaction volume of cryptos tracked by Chainalysis growing 567% in 2021, these illicit transactions represent just 0.15% of total transaction volume.
Still, $14 billion is the highest volume of illicit transactions on record, with DeFi in particular experiencing growth in those kinds of transactions.
Scams
Scamming revenue rose 82% in 2021 to $7.8 billion worth of cryptocurrency stolen from victims.
$2.8 billion of total scam revenue came from a type of scam called a rug pull, whereby developers trick investors into purchasing tokens associated with a DeFi project before draining the pools provided by those investors.
According to Chainalysis, it’s very easy for those with the right technical skills to create new DeFi tokens and get them listed on exchanges with no form of scrutiny.
The Chainalysis report states:
“We believe rug pulls are common in DeFi for two related reasons. One is the hype around the space. DeFi transaction volume has grown 912% in 2021, and the incredible returns on decentralized tokens like Shiba Inu have many excited to speculate on DeFi tokens.
At the same time, it’s very easy for those with the right technical skills to create new DeFi tokens and get them listed on exchanges, even without a code audit.”
– Crypto Trends for 2022, Chainalysis
Theft
Cryptocurrency theft grew even more, with roughly $3.2 billion worth of cryptocurrency stolen in 2021 – a 516% increase compared to 2020.
Roughly $2.2 billion of those funds – 72% of the 2021 total – were stolen from DeFi protocols.
DeFi protocols also saw the most growth by far in usage for money laundering at 1,964%.
Chainalysis estimates that as of early 2022, illicit addresses hold at least $10 billion worth of cryptocurrency.
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