As digital assets gained popularity across the world, crypto criminals too reaped huge profits. The 2022 Crypto Crime report by Chainalysis shows a jump in scamming revenue.

Illicit transactions jumped nearly 80 percent to $14 billion, hitting an all-time high, according to the report. On the other hand, the overall transaction volume jumped by 567 percent, indicating that legitimate transaction outpaced criminal transactions.

Also read: Crypto money laundering rises 30% in 2021: Chainalysis

However, most criminal activity was reported in the decentralised finance (DeFi) category, including DeFi projects or decentralised finance.

DeFi saw the greatest year-over-year growth in illicit activity. In 2020, about $162 million worth of cryptocurrency was stolen from DeFi platforms. This was a 335 percent increase in the overall stolen funds from DeFi platforms in 2019. In 2021, that figure jumped 1,330 percent, according to the Chainalysis report.

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Scamming revenue rose to about $7.8 billion worth of cryptocurrency. Over $2.8 billion of this came from rug pulls. A rug pull is a new type of scam where developers build a legitimate-looking cryptocurrency project to create investment opportunities and then take investors’ money and disappear. About 90 percent of the total scam value lost to rug pulls in 2021 is attributed to Turkish crypto firm Thodex, that halted users’ ability to withdraw funds following which its CEO disappeared.

Significant growth in the usage of DeFi protocols for laundering illicit funds was also seen.

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According to the report, the numbers don’t tell the full story. As total transaction volume touched $15.8 trillion in 2021, it is no surprise that more cybercriminals are using cryptocurrencies. The growth of legitimate cryptocurrency still outpaces the growth of criminal usage.

Another promising development is the growing ability of law enforcement to seize illicitly obtained cryptocurrency. According to the report, in November 2021, the IRS Criminal Investigations seized over $3.5 billion worth of cryptocurrency. Other agencies across the globe have also made major seizures.

Also read: Bitcoiner loses coins worth a million in ‘giveaway’ scam—what are these scams all about?

Recently, Israel’s National Bureau seized an undisclosed amount in a counter-terror financing case linked to terrorism financing. Other major seizures include $56 million seized by the US Department of Justice in a cryptocurrency scam investigation and $2.3 million seized from the ransomware group behind the Colonial Pipeline attack.

Also read: NFT scams: How to spot them and stay clear

(Edited by : Shoma Bhattacharjee)