The value of cryptocurrency-based crime hit $14 billion in 2021, up 79% from $7.8 billion in 2020, according to the 2022 Crypto Crime Report by Chainalysis. Since cryptocurrency transaction volume skyrocketed 567% to $15.8 trillion in 2021, illicit activity only represented 0.15% of the total. Nevertheless, $14 billion worth of illegal activity represents a significant problem that could curb future growth. “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,” Chainalysis said.
This illicit activity often centered around decentralized finance (DeFi) platforms, which offer financial services like lending and insurance through public blockchains instead of traditional institutions like banks. For instance, $3.2 billion worth of cryptocurrency coins were stolen in 2021—a 516% increase over 2020. About $2.2 billion (72%) were taken from DeFi sites. In addition, the use of these platforms as a means to launder money jumped 1,924% from 2020 to 2021. Meanwhile, scams such as “rug pulls,” where criminals set up fake cryptocurrency projects and disappear with investors’ money, accounted for $7.8 billion of cryptocurrency crime, up 82% from 2021.