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2021’s crypto bull market made criminals much richer

2021’s crypto bull market made criminals much richer

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Analysis shows they ended 2021 with $8 billion more in illicit crypto than they had in 2020

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A stylized illustration of a Bitcoin in purple and black shadows.
Most of it comes from stolen funds.
Illustration by Alex Castro / The Verge

At the end of 2021, cybercriminals had over $11 billion in cryptocurrency tied to illicit activity, a meteoric rise from the $3 billion they held at the end of 2020, according to a report from blockchain data company Chainalysis. The most lucrative crime was theft — 93 percent of the funds in criminals’ crypto wallets were made up of stolen coins worth $9.8 billion, according to the firm.

To find these numbers, Chainalysis looked at how much crypto was in wallets that it’s “attributed to illicit actors.” This means wallets that receive funds from things like darknet markets, ransomware operations, scams, or crypto theft.

The value of the crypto owned by criminals at the end of the year, broken down by what type of illicit activity the funds are linked with.
The value of the crypto owned by criminals at the end of the year, broken down by what type of illicit activity the funds are linked with.
Chart: Chainalysis

While cybercriminals were getting crypto from their illegal activities, the coins they already had was also getting more valuable thanks to 2021’s bull market. Though it’s plunged in the past month or so, the value of popular coins jumped a lot from the end of 2020 to the end of 2021, according to data from Yahoo Finance:

  • Bitcoin: ended 2020 at just over $29,000, ended 2021 at around $47,000
  • Ethereum: ended 2020 around $737, ended 2021 around $3,700
  • Monero: ended 2020 around $156, ended 2021 at $250

Put another way, most of the crypto criminals had at the beginning of 2021 would’ve ballooned in value by the end of the year, if they kept it around.

Criminals seemed less eager to keep their crypto in 2021 than in years past

With that said, the report notes they seemed motivated to liquidate their ill-gotten funds much faster in 2021 than they had been in the years before — Chainalysis says that compared to the rest of the years it’s been keeping track, criminals held on to funds for 75 percent less time on average.

Ransomware operators were the fastest to get rid of them, keeping funds for an average of 65 days in 2021, compared to the 468-day all-time average. Even darknet market operators, whose previous average was a long-haul 1,252 days, were only holding onto funds for just over 250 days (though that’s still plenty of time for those coins to greatly appreciate in value). Fraudsters and scammers fell somewhere in-between, keeping funds for an average of over 100 days in 2021.

As Chainalysis points out, these funds aren’t necessarily safe in criminals’ wallets, as law enforcement agencies haven’t been sitting idly by — they’ve been getting access to those wallets and seizing the crypto inside. Throughout 2021, we saw law enforcement take funds that were allegedly linked to ransomware groups or Ponzi scheme promoters. And just two months into 2022, we’ve seen even more activity; UK tax authorities commandeered some NFTs, and the US Department of Justice got its hands on $3.6 billion worth of Bitcoin that was stolen during the Bitfinex hack — we’ll probably see that sort of dent reflected in next year’s numbers, no matter what happens to the price of crypto.

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