Shark Tank star Mark Cuban recently aired his thoughts on Ethereum’s upcoming “Merge” upgrade. He pointed out how Ethereum’s utility as a smart contract platform and as a deflationary asset are at odds. In an interview with Altcoin Daily on Sunday, Cuban explained that there is an inverse relationship between deflation and utilization of Ethereum. “If utilization goes up, and the value of a token goes up, then the cost to do something goes up,” he explained. “So you have…
Chainalysis – a blockchain data platform – recently released its 2022 crypto crime report, and discovered an interesting pair of facts. While illicit crypto transactions are at record highs, their proportional share of blockchain activity is at an all-time low. This casts doubt on numerous politicians’ assertions that cryptocurrencies are only a haven for nefarious actors.
Trends In Crypto Crime
According to the firm’s report released on Monday, blockchain addresses deemed “illicit” received $14 billion worth of crypto in 2021. That’s up 79% from 2020s $7.8 billion – though as the report states, those numbers “don’t tell the full story”.
That’s because, on the whole, cryptocurrency usage has skyrocketed far faster than its use for criminal activity. Total crypto transaction volume rose to $15.8 trillion in 2021, up 567% from the previous year. In fact, Bitcoin’s transaction volume alone surpassed that of Paypal by 65% in 2021, carrying about $489 billion per quarter.
Given the figures, crypto crime now only comprises 0.15% of all transactions. That’s down from 0.62% in 2020, and a whopping 3.37% in 2019. Granted, Chainalysis grants that this figure may still have room to rise as more illicit addresses are identified. Nevertheless, with the exception of 2019’s outlier year (due to the PlusToken Ponzi Scheme) the firm asserts that the criminal share of crypto transactions is trending downward long-term.
That said, Chainalysis still acknowledges the rising absolute volume of illegal crypto volume as “a significant problem”.
“Criminal abuse of cryptocurrency creates huge impediments for continued adoption, heightens the likelihood of restrictions being imposed by governments, and worst of all victimizes innocent people around the world,” the report reads.
Criminal activity rose extra-sharply in the “stolen funds” and “scam” categories – both largely thanks to the growth of Defi. On the other hand, Ransomware volumes – which grew significantly in previous years – stayed mostly the same.
The ‘Crime’ Claim
For some politicians like senator Elizabeth Warren and Treasury Secretary Janet Yellen, crypto is only a pathway to evade the law. However, Chainalysis’s research clearly indicates that the overwhelming majority of activity that takes place on-chain is non-criminal.
This is due to a mix of mainstream adoption growing exponentially, and the ability to weed out crypto-criminals becoming more sophisticated. For example, the FBI took down the “prolific” REvil ransomware strain last year, while the OFAC placed sanctions on exchanges like Suex for facilitating such crime.