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Crypto-related crime declined in 2020: Chainalysis report

Hassan Maishera

Bitcoin with an open padlock on a computer motherboard

Cryptocurrency-related crime fell in 2020 but still attracts criminals due to the anonymous nature of transactions

Criminal activities involving cryptocurrencies fell in 2020, representing only 0.34% of the total cryptocurrency transaction volume. Chainalysis revealed this in its report titled “Crypto Crime Summarised: Scams and Darknet Markets Dominated 2020 by Revenue, But Ransomware Is the Bigger Story”.

According to the blockchain analysis company, criminal activities accounted for 2.1% of the total cryptocurrency transaction volume in 2019. Criminals transacted $21.4 billion worth of cryptocurrencies in 2019. However, this figure dropped sharply last year as criminal activities accounted for only 0.34% of the total cryptocurrency transaction volume. Monetary wise, this percentage represents only $10.0 billion in transaction volume.

The analysis company believes the decline in the percentage of criminal activity is due to the overall expansion of the cryptocurrency economy. The cryptocurrency market nearly tripled between 2019 and 2020 as Bitcoin, and other cryptocurrencies enjoyed a stellar 2020.

In 2019, scams were the number one crime where cryptocurrencies were used. The same was the case in 2020, but the total amount raised by scam projects massively declined last year. The Ponzi scheme Plus Token took more than $2 billion from millions of victims in 2019.

Crimes and their crypto transaction percentage. Source: Chainalysis blog

The graph above shows that ransomware was another popular source of illegal crypto-transactions after being non-existent over the past few years. In 2019, cryptocurrency transactions related to ransomware were only 7%. However, this crime category surged by 311% in 2019, surpassing the $1 billion mark. Chainalysis claims the ransomware incidents might be higher due to the low reporting rate.

“No other category of cryptocurrency-based crime rose so dramatically in 2020, as Covid-prompted work-from-home measures opened up new vulnerabilities for many organisations”, Chainalysis added.

Asides from scams, most of the illegal activities involving cryptocurrencies were from darknet markets, which were the second largest crime category. The darknet market accounted for $1.7 billion worth of activity in 2020, up from $1.3 billion recorded the year before.

The blockchain analysis firm further highlighted the danger of ransomware attacks and their effects on governments and businesses. “When we consider the total economic losses not only from payments but also from businesses and governments being taken offline in attacks, some experts estimate that ransomware cost $20 billion in economic losses in 2020”, Chainalysis concluded.

It would be interesting to follow how the cryptocurrency space curbs crime-related transactions as prices of the cryptocurrencies continue to surge and set new all-time highs.

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