Chainalysis: Overall impact of crypto crime to decline further in 2022

Kim Grauer, a researcher at Chainalysis, said: "When it comes to illicit financing, cash is still king, and that's unlikely to change."

According to Kim Grauer, research director at Chainalysis, crypto-related crime is likely to become a smaller and smaller share of the overall industry in the coming year as law enforcement makes more use of the transparency provided by blockchain technology.

According to a report from Chainalysis on Jan. 6, the growth in legitimate cryptocurrency use “much outpaces the growth in criminal use.” The share of cryptocurrency trading volume associated with illicit activity has never been lower, accounting for only 0.15% of the volume in 2021.

She told Cointelegraph that she expects the growth of legal cryptocurrency use relative to illegal use to continue into 2022, barring any “unusual criminal incidents.”

She said the situation in the space looks promising as “the share of illicit transactions continues to decline” and “the narrative that cryptocurrencies are primarily a means of exchange for criminals is finally abandoned.”

“Victories in enforcement continue to demonstrate to bad actors that the inherent transparency of cryptocurrencies makes them an undesirable means of moving illicit funds. When it comes to illicit financing, cash is still king, and that’s unlikely to change.”

During 2021, rug pull is the scam of choice for crypto criminals. In 2021, scam revenue increased by 82% to $7.8 billion, of which more than $2.8 billion came from rug pulls (referring to cryptocurrency developers withdrawing support, DEX liquidity pools, or abruptly abandoning a project without warning. away investors' funds).

However, Grauer said that doesn't necessarily mean that rug pull will remain the most prevalent scam in 2022. Conversely, as the field moves toward web3, criminals may “abuse new technologies” such as DeFi, NFTs, and DAOs.

“We’re seeing this [in 2021], especially in DeFi, where criminals are not just targeting DeFi platforms for hacking or rug pulls, but are starting to increasingly use DeFi platforms to launder money.”

Additionally, Grauer said that while she does not expect a potential crypto bear market to affect the rate or type of crypto crime, a severe financial recession or depression could.

“When you take into account the entire economic market — not just the crypto market — recessions and depressions could drive an increase in criminal activity,” she said.

During 2021, there have been many notable successes for law enforcement agencies around the world. In November 2021, the IRS Criminal Investigation Bureau announced that they had seized over $3.5 billion worth of cryptocurrency from non-tax investigations in 2021.

Despite the low percentage, cryptocurrency-based crime actually hit an all-time high in 2021, with illicit addresses raking in $14 billion during the year, up from $7.8 billion in 2020, according to Chainalysis. (Cointelegraph)