The idea is to avoid terrorism financing, ransomware, darknet markets, outright theft, and sanctions, among other crimes.

Chainalysis, a company that helps government agencies, cryptocurrency businesses, and financial institutions engage confidently with cryptocurrency, always drives studies to know more about the world of cryptocurrencies and how to improve it.

The firm’s 2020 “State of Crypto Crime” report, published recently, is an analysis of illicit activities that took place last year, contrasting 2019’s actions with previous years.

In its investigation, Chainalysis found that while the amount of bitcoin sent from criminal entities doubled between 2018 and the end of 2019, it still accounts for just 0.08 percent of the total number of bitcoin transactions last year.

While exchange hacks and thefts dominated headlines last year, “scams were by far the highest-earning category of crypto crime in 2019,” the report said.

“Cryptocurrency scams represent a significant danger to consumer protection, and the growth of this activity in 2019 calls for increased action from regulators, law enforcement and exchanges alike”, the company warned.

A High Level of Crime

Because some people are using cryptocurrencies to commit fraud, the firm also analyses and stores information about the fraud that happened during the year.

In that sense, according to a special report, scammers received $4.3 billion in crypto, out of about $6 billion received from an illicit activity last year. In that report, the company determined that scams accounted for $8.6 billion in crypto transactions, while criminal activity (including hacks and thefts) totaled just under $12.5 billion.

But the company studies other categories such as terrorism financing, ransomware, darknet markets, outright theft, sanctions, and child abuse. Besides, the total amount of crypto used in scams is disproportionately weighed down by “just three separate large-scale Ponzi schemes” without the equipment the numbers drop dramatically (for example, the PlusToken Ponzi appears to have accounted for between $2 and $3 million alone).

Chainalysis mentions at multiple points that a solution, or at least the beginnings of one, to the issue of illicit activity, can come from more informed regulation, better enforcement of regulation and action by crypto exchanges to tackle illicit activities.

“We believe the consumer protection implications make cryptocurrency scams an issue regulator must address and law enforcement must have the resources to investigate,” the report said. “Exchanges are also in a unique position to help, both in terms of protecting users from being scammed and preventing successful scammers from depositing funds or cashing out”, the study adds.

Regulators and law enforcement agents must become more familiar with analyzing blockchain platforms as part of this effort, the report said.

Recently, the company also highlighted its services, noting that while money laundering in the fiat world might require court-issued subpoenas to tackle, “blockchain analysis tools like Chainalysis” can help investigators analyze transactions recorded on public ledgers, according to what the firm explained.

Regulation would be the answer for those all problems and to prevent money laundering and other crimes. For this reason, Chainalysis will continue to analyse this area to preserve and maintain the good use of digital assets.

By María Rodríguez


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