Crypto Crime Reaches New High: US$20 Billion in 2022

Little to poor regulatory oversight, pseudonymity and the irreversible nature of crypto transactions made it a perfect getaway car for cybercriminals. Therefore, despite the successive collapse of several cryptocurrency firms throughout 2022, the value of cryptocurrency transactions tied to illicit activity inflated to a new estimated high of US$20.1 billion in 2022, according to a report by Chainalysis.

“We have to stress that this is a lower bound estimate – our measure of illicit transaction volume is sure to grow over time," reads the report, referencing the need to revise its 2021 estimate from U$14 billion to US$18 billion as more scams were discovered.

Hundreds of billions of dollars were wiped out for millions of consumers across the world in 2022 with the bankruptcy of major cryptocurrency players, toppling what was at its peak a US$3 trillion market. Its implosion left investors with significant losses and amplified calls for regulatory oversight to protect consumers. Setting the tone for the year was the collapse of Singapore-based company, TerraUSD, which began with a mass token sell-off that erased about US$500 billion in weeks. Its collapse set off a chain reaction that would lead to the subsequent downfall of crypto lenders Celsius Network, Voyager Digital, Three Arrows Capital and ultimately BlockFi and FTX. 

The result was a “crypto winter” that slashed overall crypto transactions, and yet the value of crypto transactions tied to illicit activity rose for a second consecutive year, reported Chainalysis. Security professionals from Cybrsixgill’s security research suggest that this increase is likely the result of cybercriminals asking for higher crypto amounts as the value of their personal assets begin to tumble. Moreover, the disappearance of major players has forced cybercriminals to turn to sanctioned entities such as Garantex and others to cash-out, increasing their transaction volumes by over 100,000 fold in 2022, making up 44 percent of last year's illicit activity, said Chainalysis. 

With the value of crypto diminished, the volume of crypto transactions tied to scams, ransomware, terrorism financing and human trafficking fell as criminals turned towards other activities. Instead, there has been an observed uptick in attacks involving remote-banking trojans, malware designed to steal privileged credentials, phishing attacks, credit card harvesting and others attacks that look to make off with conventional currency, notes email security company Proofpoint.