Cryptocurrency-related crimes fell last year to a small fraction of the overall trading volume. But some hackers increased as criminals exploited people working from home during the pandemic.
Last year, illicit activity accounted for 0.34% of the volume of cryptocurrency transactions, according to a report by blockchain data firm Chainalysis. This fell from 2% about a year earlier.
“We saw a significant decrease in the share of global activity associated with illicit entities,” Chainalysis head of research Kim Grauer told CNBC. “However, ransomware was by far the largest category in terms of business growth and we are seeing a record high for dark network market activity.”
Ransomware is malicious software that hackers use to infect a computer and then charge a fee to unlock it. This reward is often paid in bitcoin or other cryptocurrencies.
The category accounted for only 7% of all cryptocurrency funds received by criminals, but increased 311% year-over-year. Chainalysis noted that more people were working from home as a new vulnerability for businesses and an opportunity for criminals.
Dark net markets were the second largest crime category, with $ 1.7 billion worth of cryptocurrency activity, up about 30 percent from a year earlier. Also known as the dark web, the dark web is a network that uses the Internet, but requires specific programs and permissions to access it.
Chainalysis cryptocurrency report
Chainalysis
Source: Chainalysis
Criminals have resorted to cryptocurrencies like bitcoin for the ease of sending online instantly.
Cryptocurrencies are also pseudonyms. You can see where the funds were sent, making it easy to track companies like Chainalysis. But it is not seen who sent them.
These functions have caught the attention of regulators who fear the potential role of cryptography in money laundering and terrorist financing.
President Biden’s nominee for Treasury Secretary Janet Yellen mentioned the potential for misuse at her confirmation hearing this week, which analysts say affected bitcoin prices. The U.S. government must “look closely at how to encourage its use for legitimate activities,” while “reducing its use for malicious and illegal activities,” Yellen said.
Scams still accounted for more than half of all cryptocurrency-related crimes, but fell significantly year after year.
Grauer of Chainlysis said it is due to greater awareness of events like the PlusToken Ponzi scheme, which received more than $ 2 billion from victims in 2018.
“People learned a little following the mentality” to get rich quick “two years ago,” Grauer said. “This may have made people understand some of these great Ponzi schemes.”
Bitcoin has become a major Wall Street investment in recent months. The world’s largest cryptocurrency topped $ 40,000 in early January, driven by interest from retail institutions and investors, who can now buy bitcoins through payment companies like PayPal.
The cryptocurrency fell below $ 30,000 on Thursday.