In a preview of its 2022 Crypto Crime Report, blockchain data platform, Chainalysis revealed that cryptocurrency-based crimes hit a new all-time high in 2021, with $14 billion lost over the year, up from $7.8 billion in 2020.
Chainalysis, which targets releasing the full cryptocurrency crime report in February, also revealed that the total transaction volume grew to $15.8 trillion in 2021, up 567% from the total in 2020.
“Given that roaring adoption, it’s no surprise that more cybercriminals are using cryptocurrency. But the fact that the increase was just 79% — nearly an order of magnitude lower than overall adoption — might be the biggest surprise of all,” the report stated.
Transactions involving illicit addresses represented just 0.15% of cryptocurrency transaction volume in 2021 despite the raw value of illicit transaction volume reaching its highest level ever.
Chainalysis attributes the growing number of crypto crimes in part to the rise of decentralised finance, or DeFi, and its potential for misuse. Over $2.8 billion stolen from victims came from rug pulls, a term used for a cryptocurrency project that takes money from investors and then drains the funds. The firm speculates that because it is relatively easy to create new DeFi tokens and get them listed on exchanges, scammers continue to make a profit.
About $3.2 billion worth of cryptocurrency was stolen in 2021, mostly from DeFi protocols that sometimes have errors in their smart contract codes.
“DeFi is one of the most exciting areas of the wider cryptocurrency ecosystem, presenting huge opportunities to entrepreneurs and cryptocurrency users alike,” the report further stated. “But DeFi is unlikely to realize its full potential if the same decentralisation that makes it so dynamic also allows for widespread scamming and theft.”