AltIndex.com exposes $70 billion in illicit crypto transactions, highlighting the scale of blockchain fraud.

Blockchain fraud: According to data from AltIndex.com, the cryptocurrency market has recorded unlawful transactions worth close to $70 billion over the last five years.

Rising fraud in the cryptocurrency industry: the fight for regulation

The criminal trade in cryptocurrencies reached a record-breaking $20.6 billion in the previous year, making it the most valuable year in the market’s history.

Despite a brief decrease in market conditions, illicit cryptocurrency activity increased for the second year in a row, reaching outstanding levels over the previous five years.

Illegal cryptocurrency trades involve activities including fund theft, fraud, ransomware extortion, human trafficking, financing terrorism, and participation in underground markets.

Cyber Crime Report 2023 by Chainalysis indicates that over the last five years, the overall amount of such transactions has dramatically increased.

The bitcoin sector recorded illegal transactions worth $4.9 billion in 2017. This amount nearly tripled to $12.3 billion in 2019 after a small reduction to $4.6 billion the year before.

According to statistics, there were 30% fewer unlawful transactions in 2020 than there were in 2019. After that, though, there was a turnabout, with a sharp rise in illegal activity in the market in 2021 and 2022.

The overall amount of illegal transactions in the cryptocurrency industry more than doubled to $18.1 billion between 2020 and 2021.

With the overall value of transactions reaching $20.6 billion in 2022—a staggering rise of 308% over five years—illegal activities continued to escalate.

Crypto fraud

Increase in the number of sanctioned entities in the cryptocurrency world

The proportion of illegal transactions in the cryptocurrency market as a percentage of all transactions has decreased over the aforementioned time period.

These transactions made up 0.86% of all transactions in this industry five years ago. However, this percentage sharply decreased to 0.24% last year.

Over the past five years, there has been a huge rise in the number of sanctioned businesses and addresses, which has occurred concurrently with the rise in illegal activity in the bitcoin industry.

Data from Chainalysis shows that the US Treasury Department’s Office of Foreign Assets Control (OFAC), which named two Iranian people linked to the SamSam malware, imposed the first cryptocurrency-related sanctions in 2018.

Most of the addresses on the sanctions lists throughout the following two years were connected to people’s private wallets. In more specific terms, there were two addresses on average per designation associated to cryptocurrencies in 2018, four in 2019, and nine in 2020.

But in 2021, when OFAC started classifying full crypto services rather than just people, something very different happened. The number of addresses connected to each sanctioned business significantly increased as a result of this modification, reaching 35 in 2022.

Some of these designations even had identifiers that were more than 100 cryptographic addresses.

From two in 2018 to 10 in the most recent year, the number of entities using cryptocurrency and being subject to fines has dramatically expanded during this time.

Additionally, data gathered by Chainalysis showed that over the previous five years, operations involving stolen funds and the darknet market were the next most common sources of income for cryptocurrency-related criminal activities.

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