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Unveiling the Dark Side: Crypto Market Records Alarming $70B Illicit Transactions in Just Five Years

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Last year, the crypto space saw a shocking $20.6bn worth of illicit transactions, the highest figure in the market’s history.

Despite the market downturn, the illicit crypto activity increased for the second consecutive year, pushing the five-year total to shocking highs.

Illicit Crypto Transactions Surged by 308% Since 2017

The illicit crypto activity includes transactions tied to stolen funds, scams, ransomware, human trafficking, terrorism financing, and dark net markets. According to Chainalysis 2023 Cyber Crime report, the total volume of these transactions has skyrocketed in the past five years.

In 2017, the crypto space saw $4.9bn worth of illicit transactions. After falling to $4.6bn a year later, this figure nearly tripled and hit $12.3bn in 2019. Statistics show 2020 saw another downturn, with roughly 30% less illegal transactions in the market. But it was downhill from there, with 2021 and 2022 seeing a surge in illicit crypto activity.

Between 2020 and 2021, the total transfer volume of illicit transactions in the crypto space more than doubled to $18.1bn. The illegal activity continued growing in 2022, with the total value of transactions rising to $20.6bn and showing a massive 308% increase in five years.

Still, the share of illicit transactions in total crypto volume has dropped in this period. Five years ago, they made up 0.86% of all transactions in the crypto space. This share dropped to only 0.24% last year.

The Number of Sanctioned Crypto-Related Entities Increased Fivefold

Although the illicit activities in the crypto space surged in the past five years, so did the number of sanctioned entities and addresses.

According to Chainalysis data, 2018 saw the first crypto-related sanctions of the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury when it designated two Iranian nationals associated with the SamSam ransomware.

Over the next two years, most of the addresses included as sanctions identifiers were personal wallet addresses owned by individuals, with an average of two addresses per crypto-related designation in 2018, four in 2019, and nine in 2020.

However, that changed in 2021, after OFAC began to designate entire crypto services instead of individuals. As a result, the average number of addresses per sanctioned entity jumped to 35 in 2022, with some designations containing more than a hundred crypto addresses as identifiers.

The annual number of sanctioned crypto-related entities increased fivefold in this period, rising from two in 2018 to ten last year. The Chainalysis data also showed scams were the top revenue stream of crypto crime in the past five years, followed by stolen funds and the darknet.

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