Less than 1% of the value moved with bitcoin and cryptocurrencies comes from crimes

Key facts:

The volume of money moved in illicit activities fell 80% between 2019 and 2020.

Ransomware moved 300% more money than in 2019, amid the pandemic.

The movements of funds with bitcoin and other cryptocurrencies associated with illicit activities decreased considerably during 2020, compared to the previous year. This is reflected in the most recent report by Chainalysis, a research firm that monitors these events.

Throughout 2020, only 0.34% of the volume of transactions with bitcoin and cryptocurrencies was associated with some type of crime. This represented more than 80% decrease, compared to the 2.1% registered during 2019., as the report, published a few days ago, shows.

In 2019, the firm estimates that more than $ 21 billion in bitcoin and other cryptocurrencies were moved in illicit activities. Meanwhile, that figure dropped to about 10 billion in 2020, taking into account the total value between funds received and sent by addresses identified with a crime.

The researchers point out that in their initial estimates for 2019, the volume of transactions associated with crime comprised only 1.1% of the total. However, the discovery of new addresses involved in some crime caused the final figure to grow. Thus, expect a potential increase from 2020 data in the future.

transferred 2019 market activities

In 2020, less than half of the volume transferred in 2019 was moved. Source: Chainalysis.

Despite those estimates, the report’s creators hold an encouraging stance on crime and cryptocurrencies. Mainly, they consider the decrease in funds related to crimes that moved during the year to be positive, although “one of the reasons why the percentage of illicit activity was reduced is that general economic activity almost tripled between 2019 and 2020.”

“Cryptocurrency-related crime is on the decline, it’s still a small part of the overall cryptocurrency economy, and it’s comparatively less than the amount of illicit funds involved in traditional finance.”


Scams lead the movement of illicit funds in bitcoin

As in 2019, most of the funds associated with crimes were part of scams with bitcoin or other cryptocurrencies. In this section, Chainalysis only takes into account the funds received by addresses associated with crimes, which in total was about 5 billion dollars. Of that figure, 54% were part of scams, for a total of 2,600 million.

Although they held the first place among crimes benefited by the use of cryptocurrencies, scams fell considerably compared to the previous year. In total, the volume of money received in scams was reduced by more than 70%, according to the investigation records.

The report highlights that the decline in value in bitcoin and cryptocurrencies associated with criminal activities is largely due to the fact that there were no scams of the caliber of PlusToken, a scheme to which the Chinese authorities confiscated about 200,000 stolen bitcoins in 2019.

btc value criminal activities

Scams (in the graph) dropped considerably in 2020. Source: Chainalysis.

Behind scams, another majority portion of the total volume for the year was associated with darknet markets. It is curious, as the researchers themselves point out, the increase registered in these markets during 2020. This last year there were about 1.7 billion dollars in bitcoin and cryptocurrencies associated with dark markets, representing a slight upturn from the 1.3 billion in 2019.

Ransomware on the rise in the face of the coronavirus ‘new normal’

The most significant increase was that of ransomware or data hijacks. These attacks, commonly associated with ransoms that are paid with bitcoin and other cryptocurrencies, increased the volume of money moved by more than 300% compared to 2019.

“No other category of cryptocurrency-based crime increased dramatically in 2020, as work-from-home measures driven by the coronavirus opened up new vulnerabilities for many organizations,” the research notes.

cryptocurrency study criminal activities

The volume of funds associated with ransomware increased more than 300% in 2020. Source: Chainalysis.

In effect, the arrival of the pandemic forced a massive migration to the digital sphere, not only from people’s daily lives, but also from work, business and business spheres.

As CriptoNoticias reviewed at the beginning of this year, this situation generated during 2020 a considerable proliferation of crimes associated with digital life. And in this scenario, kidnapping and extortion for digital data acquired a new role.

Most of the funds associated with this type of crime are laundered on large exchanges, as we have discussed above. In fact, the same Chainalysis investigation reported by this newspaper this Wednesday, February 17, pointed out that in general, during 2020 the trend of money laundering on large platforms continued. They even consider that money laundering with cryptocurrencies was more centralized never.