Sanctions drive crypto transfers to illegal addresses to an all-time high: Chainalysis report says

Blockchain and cryptocurrency analytics firm Chainalysis said that volumes of crypto received by illicit addresses marked a new high in 2022 as OFAC sanctions grew 

February 20, 2023 02:12 pm | Updated February 21, 2023 09:54 am IST

File photo of token representations of cryptocurrencies

File photo of token representations of cryptocurrencies | Photo Credit: REUTERS

The crypto received by addresses linked to illegal activities hit a new all-time high in 2022, for the second year in a row, to reach a volume of $20.6 billion in what could still be a “lower bound” estimate, said blockchain and crypto analytics firm Chainalysis in its 2023 Crypto Crime Report released this month.

This rise came in spite of a depressed market, according to the company, and surpassed the 2021 total by over $2 billion.

Chainalysis looked at illicit addresses associated with child abuse material, ransomware, stolen funds, sanctions, terrorism financing, crypto scams, cybercriminal administrators, fraud shops, and darknet markets.

The company noted that around 43% of last year’s “illicit transaction volume” came from activity linked to entities hit by the Office of Foreign Assets Control’s (OFAC) sanctions.

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The calculation did not include funds lost to collapsed crypto platforms such as Celsius, Three Arrows Capital, and FTX.

“Overall, illicit activity in cryptocurrency remains a small share of total volume at less than 1%. It’s also worth keeping in mind that despite this year’s jump, crime as a share of all crypto activity is still trending downwards,” said Chainalysis in its report.

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