Revenue from crypto-related crime dropped by more than half in 2020 according to Chainalysis’ annual report on the subject.
Cybercriminals netted around $5 billion less than the $10 billion plus they got away with in 2019, representing a 53% fall.
Transactions involving illicit funds have decreased even more rapidly than the total volume of those funds, falling from 2.1% of all transactions analyzed in 2019 down to just 0.34% last year.
Among the eight categories of transactions deemed “illicit” by Chainalysis, the dollar amount of crypto taken in by scams decreased the most, by 71% to $2.6B, largely due to the fact that 2019’s multi-billion dollar PlusToken scandal dwarfed anything seen in 2020 so far.
Overall crypto crime volume — including the proceeds of crime and the attempts to launder it — fell from above $20B in 2019 to around $10B last year.
But it’s not all good news and possibly the most alarming part of the report is the finding that ransomware-related theft rose 311% from 2019 to 2020, representing an additional loss of more than $250 million in 2020 compared to 2019.
Even with a year-over-year increase in ransomware and darknet market activity, Chainalysis says the outlook on crypto crime “has never been better,” thanks to recent advancements in regulatory and compliance processes.
“The good news is three-fold: Cryptocurrency-related crime is falling, it remains a small part of the overall cryptocurrency economy, and it is comparatively smaller to the amount of illicit funds involved in traditional finance.”
Chainalysis’ conclusions broadly echo those put forth in a recent report by security firm CipherTrace, which found that crypto-related crime dropped by 57% in 2020.
According to Chainalysis, the big rise in ransomware is due to the introduction of “new strains taking in large sums from victims,” which, when combined with pre-existing ransomware strains, accounted for nearly $350 million of cryptocurrency theft in 2020.
Although the origins of ransomware attacks may seem disparate and random, Chainalysis believes that the infrastructure attackers need to launder crypto into cash “may be controlled by just a few key players,” similar to the origins of the ransomware itself.
Chainalysis also notes that the increasing collection of personal identifying information from exchanges has effectively forced criminals to “rely on a surprisingly small group of service providers” to exchange ill-gotten crypto holdings into fiat.
“In the long run, (compliance) efforts by exchanges will also remove some of the incentive to use cryptocurrency in criminal activity, as it will become much harder for cyber criminals to convert cryptocurrency into cash if they can’t use exchanges.”
Last month, the Department of Justice announced it had confiscated $454,000 in cryptocurrency from a ransomware operator; the bust being the result of a collaboration with Chainalysis.