Cryptocurrency-based crimes hit a record high in 2021, with illicit transactions rising 79.4 percent to $14 billion, from $7.8 billion in 2020.
A report by American cryptocurrency market research firm Chainalysis says laundering of stolen funds through cryptocurrencies and scamming of users were the highest crimes last year, accounting for over half of the illicit transactions.
Crime on the rise
Other crypto crimes that increased include financing of terrorism, ransomware, money laundering of child abuse material funds, cybercriminal administration and fraud shops.
However, illicit transactions on total cryptocurrency transactions dropped from 0.62 percent in 2020 to 0.15 percent in 2021.
Transactions increased by 567 percent in the same period, to $15.8 trillion.
Increased criminal activity in the crypto space echoes alarms sounded by the International Monetary Fund in its Global Financial Stability report released in October last year, which highlighted the threat of cryptocurrencies to global economies.
According to the IMF, the major challenges with cryptocurrencies are cyber-risks that expose users to hacking and loss of their assets, and governance risks that “involve the lack of transparency around issuance and distribution of crypto assets”.
In 2021, the Chainalysis report revealed that the highest risk areas in crypto crime were North Korea, Russia, and Iran. Hacking, ransomware, and sanction-evasion transactions respectively increased significantly in the past year.
In East Africa, there were no notable illicit crypto transactions.
“As cryptocurrency continues to grow, it is imperative that the public and private sectors work together to ensure that users can transact safely, and that criminals can’t abuse these new assets,” the Chainalysis report stated.