Cryptomoney is on the rise and its rate of criminal activity, already low compared to overall activity, is declining. One more argument for the defenders of the cryptoskills? Ransom money, which is particularly destructive, is on the rise.
Ransom activity exploded in 2020 in the world of cryptography. iStock/D-Keine
In 2020, Bitcoin, and in its wake, other cryptomoney products, have experienced an extraordinary resurgence of interest. This is the result of a combination of factors, including a halving of the mining reward in May, a global health crisis that is making bitcoin increasingly a safe haven, and growing demand from institutional investors who are starting to buy in bulk for their clients. After breaking the $40,000 cap on Thursday, January 7, 2021, Bitcoin appears to be stabilizing around $36,000.
At the same time, another phenomenon in cryptomoney in 2020 has been a decline in criminal activity in transaction volumes. In 2019, it accounted for 2.1% of all transactions, or $21 billion, compared with 0.34% in 2020, or $10 billion of the transaction volume, according to Chainalysis data. The specialist in cryptometric analysis is about to publish the 2021 edition of its annual Crypto Crime Report. According to the study, one of the reasons why criminal activity related to cryptos fell last year is that overall cryptos economic activity almost tripled between 2019 and 2020.
This declining rate, however, needs to be qualified for several reasons:
The total value of cryptos sent and received by criminal entities versus the criminal share of all cryptos activity. © Chainalysis
A significant increase in ransom demands
In any event, the Chainalysis report suggests that criminal activity related to cryptomoney now represents an even smaller part of this economy. Within this 0.34%, scams constituted the majority of cryptomoney crimes in 2020 (54%, or approximately $2.6 billion in cryptomoney received by criminal entities). It should be noted, however, that the gross value and share of these scams in all criminal activity is much lower than in 2019, a year marked by the PlusToken scam. This Ponzi scheme alone had stolen more than $2 billion from millions of victims. In second place are the darknet markets. A category of crime that is on the rise in 2020 ($1.7 billion in cryptomoney activity) compared to 2019 ($1.3 billion).
The largest increase is in ransom money. While they account for only 7% (almost $350 million) of the « turnover » recorded by perpetrators of crimes related to cryptomoney in 2020, this is an increase of 311% over 2019. « No other category of cryptocrime has grown so dramatically in 2020, while the Covid-led teleworking measures have opened up new vulnerabilities for many organizations, » the report says. The report also points out that ransom software can be particularly destructive for governments, companies or certain services such as hospitals.