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Crypto crime hit document $14 billion in 2021, analysis exhibits

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By Tom Wilson

LONDON (Reuters) – Crime involving cryptocurrencies hit an all-time excessive of $14 billion final yr, blockchain researcher Chainalysis mentioned on Thursday, a document that comes as regulators name for extra powers over the fast-growing sector.

Crypto obtained by digital pockets addresses linked to illicit exercise together with scams, darknet markets and ransomware jumped 80% from a yr earlier, Chainalysis mentioned in a report. The exercise represented simply 0.15% of whole crypto transaction volumes, its lowest ever.

Total volumes soared to $15.8 trillion in 2021, up over five-fold from a yr earlier, U.S.-based Chainalysis mentioned. Digital property, from bitcoin to non-fungible tokens, exploded in recognition in 2021 amid an embrace from institutional buyers and main firms.

Newcomers have been drawn to the promise of fast positive aspects touted by crypto backers, in addition to hopes that bitcoin affords a hedge towards hovering inflation. But cryptocurrencies are nonetheless topic to patchy regulation, leaving buyers with little recourse towards crime.

Monetary watchdogs and policymakers from Washington to Frankfurt have fretted over using crypto for cash laundering, with some urging lawmakers to grant them better powers over the business.

“Prison abuse of cryptocurrency creates enormous impediments for continued adoption, heightens the probability of restrictions being imposed by governments, and worst of all victimizes harmless folks around the globe,” Chainalysis mentioned.

Driving the rise in crime was an explosion of scams and theft at decentralised finance – DeFi – platforms, it mentioned.

DeFi websites – which provide lending, insurance coverage and different monetary providers whereas bypassing conventional gatekeepers corresponding to banks – have been stricken by issues that embody flaws in underlying code and opaque governance.

Total cryptocurrency theft grew over five-fold from 2020, with round $3.2 billion price of cash stolen final yr. Round $2.2 billion of these funds, some 72% of the full, had been stolen from DeFi websites.

Scams at DeFi platforms – corresponding to “rug pulls,” the place builders arrange phoney funding alternatives earlier than disappearing with buyers’ money – hit $7.8 billion, an 82% bounce from 2021, Chainalysis mentioned.

(Reporting by Tom Wilson; Enhancing by Frank Jack Daniel)

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