Cryptocurrency crime hit a record $14B in 2021, report says

Illicit activity makes up a small percentage of all cryptocurrency transactions, however.

Zachary McAuliffe Staff writer
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Cryptocurrency-based crime brought in about $14 billion to illicit addresses in 2021, but this represents less than 1% of all cryptocurrency based transactions last year, according to Chainalysis.

The total cryptocurrency transaction volume grew to $15.8 trillion in 2021, up more than 500% from 2020. Only 0.15% of those transactions went to illicit addresses, said Chainalysis on Thursday, in a preview of its 2022 Crypto Crime Report.

"Crypto crime reached an all-time high in raw numbers at $14 billion in illicit transaction volume, but an all-time low as a share of all activity at 0.15%," said Kim Grauer, head of research at Chainalysis. "This is because the growth of legitimate cryptocurrency activity far outpaced that of illicit activity."

Cryptocurrencies are decentralized digital currencies that don't have physical bills or coins and are tracked on a system called the blockchain. Because of their decentralized nature, the value of cryptocurrencies is based off what people are willing to pay for them. The best known cryptocurrency is bitcoin, but there are thousands of other cryptocurrencies, including ethereumlitecoin and dogecoin.

Cryptocurrency stolen from people in scams rose by more than 80% in 2021 to $7.8 billion, according to Chainalysis, and rug pulls accounted for over $2.8 billion of that total. In a rug pull, developers build what appears to be a legitimate cryptocurrency project before they take investors' money and disappear. 

As cryptocurrency becomes more mainstream and cryptocurrency crime grows, law enforcement is also stepping up. The IRS Criminal Investigations said it seized $3.5 billion in cryptocurrency in 2021. The Department of Justice also seized $53 million in cryptocurrency in 2021.

Read more: 5 predictions for bitcoin, NFTs and the future of money