A study by blockchain analytics firm Chainalysis finds that cryptocurrency-related crime has fallen significantly. The criminal share of all crypto activity fell to just 0.34% in 2020. This contradicts recent statements by U.S. Treasury Secretary nominee Janet Yellen and ECB President Christine Lagarde that cryptocurrencies are mostly used for illicit financing.
Crypto Crime Plummeted in 2020
Chainalysis shared some findings from its 2021 Crypto Crime Report this week. While acknowledging that â€œcryptocurrency remains appealing for criminals as well due primarily to its pseudonymous nature and the ease with which it allows users to send funds anywhere in the world instantly,â€ the blockchain analytics firm detailed:
In comparison, the firm explained that in 2019, â€œcriminal activity represented 2.1% of all cryptocurrency transaction volume, or roughly $21.4 billion worth of transfers.â€ Last year, â€œOne reason the percentage of criminal activity fell is because overall economic activity nearly tripled between 2019 and 2020,â€ the company noted.
Chainalysis noted that darknet markets were the second-largest crime category. It accounted for $1.7 billion worth of cryptocurrency activity, which was an increase from $1.3 billion in the previous year. Ransomware accounted for just 7% of all funds received by criminal addresses, which was just under $350 million worth of cryptocurrency. While small, ransomware saw a 311% jump over 2019.
The findings by Chainalysis contradict the recent statements made by Joe Bidenâ€™s pick for the U.S. Treasury Secretary, Janet Yellen, and ECB President Christine Lagarde. Yellen said Tuesday that many cryptocurrencies are used â€œmainly for illicit financing.â€ Meanwhile, Lagarde said last week that bitcoin â€œhas conducted some funny businessâ€ and some â€œtotally reprehensible money laundering activity.â€
Several people in the crypto industry have pointed out the error of their statements, including a well-known economist who called Lagardeâ€™s statement â€œoutrageous.â€ He emphasized, â€œwe all know that the vast majority of money laundering globally is conducted in fiat currencies, particularly in U.S. dollars and euros.â€
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