According to a report released on Thursday by Chainalysis, a platform that provides data on blockchain technology, the volume of crypto transactions funding illegal activities – such as terrorism and human trafficking – has quadrupled to $20 billion over the last five years.
It’s more than obvious that cryptocurrencies such as Bitcoin and Ethereum are still difficult to regulate although, in theory, they supposed to be safer because the blockchain technology they’re using makes the process more transparent by creating a record of each transaction.
The amount of crypto funds obtained in 2022 either illegally or for groups/ individuals to use for illicit purposes stood at just over $20 billion, which is up from $18 billion in 2021, and a little less than $5 billion five years ago.
The report said that nearly half of those $20 billion of the illicit crypto funds were received by sanctioned groups, mainly Russian crypto exchange Garantex, which was sanctioned in April 2022 by the Office of Foreign Assets Control, which is part of the US treasury.
The exchange, however, has been able to continue operating with impunity since Garantex is a Russia-based business.
Part of the illicit crypto funds received last year were by entities involved in human trafficking or used to finance terrorism operations.
Another part was accumulated by funds extorted through ransomware attacks, the digital money that was stolen from people or groups, cryptocurrencies collected through scams, and money sent to cybercriminal administrators.
Chainalysis said in the report, which pointed out last year as one of the most tumultuous in cryptocurrency history, that 2022 events have made clear that the industry has room for improvement in this respect although blockchains are inherently transparent.
Among the events in the industry that have marked 2022 was the collapse of several large crypto firms, including Celsius, Three Arrows Capital, and, most notably, virtual asset exchange FTX, which only a year ago was worth $32 billion.
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