Illicit cryptocurrency exercise in 2021 and the primary quarter of 2022 has declined as a share of general crypto exercise, based on blockchain forensics agency CipherTrace.
The cryptocurrency trade has lengthy held a popularity in some jurisdictions as a haven for criminality. However, CipherTrace estimates that illicit exercise was between 0.62% and 0.65% of general cryptocurrency exercise in 2020. The agency reported that it has now fallen to between 0.10% and 0.15% of general exercise in 2021.
In its Cryptocurrency Crime and Anti-Money Laundering Report launched June 13, CipherTrace outlined that the highest ten decentralized finance (DeFi) hacks in 2021 and Q1 2022 netted attackers $2.4 billion.
Over half of that determine got here from simply two occasions, the most important being the late March 2022 Ronin Network exploit value about $650 million and the $610 million August 2021 hack of the Poly Network, most of which was returned by the nameless hacker.
Within an analogous time interval, anti-money laundering (AML) associated fines within the banking sector elevated dramatically with 80 establishments fined in 2021, up from simply 24 in 2020 based on Kyckr.
While the overall greenback quantity of the fines fell from 2020, final yr noticed the banks pay $2.7 billion value of fines for AML or Know Your Customer (KYC) associated violations, the most important single wonderful totaling round $700 million.
While vital sums have been exploited in crypto, CipherTrace detailed the quickly increasing crypto ecosystem, noting the overall crypto market exercise for 2020 was round $4.3 trillion, which grew to roughly $16 trillion of exercise simply within the first half of 2021.
CipherTrace says that the expansion of the crypto market additionally brings with it elevated scrutiny from the world’s regulators, who’re “starting to take decisive action to ensure that the space isn’t just a modern-day wild west.”
Related: A life after crime: What occurs to crypto seized in felony investigations?
Some of essentially the most vital regulatory occasions cited within the report embody the United States President Biden’s crypto government order in March to check blockchain expertise, Dubai establishing a digital property regulator, and the European Union’s proposed anti-money laundering legal guidelines.
CipherTrace added organizations are going to have a “very real incentive to shape up” or face “heavy losses at the hands of the government,” including it expects the threats current in crypto would be the focus of future regulatory efforts.