2020 was a good year for the crypto market, especially the second half of the year despite the pandemic. Bitcoin and other digital assets recovered from the spectacular crash on Black Thursday to set new records and usher in a new era of institutional investments in the crypto market.
Between the March 12 crash of $4,860 and the current ATH of $41,941, bitcoin has recorded over 100% in gains according to data by CoinMarketCap. But despite carrying on this impressive performance into 2021, the crypto market has remained appealing to criminals primarily due to its support for borderless anonymous transactions.
However, a new report by leading on-chain analysis platform Chainalysis shows that compared to 2019, crypto-related activity fell significantly in 2020 partly due to the transparent and traceable nature of crypto transactions.
Chainalysis statistics compare the total crypto value sent and received by criminal entities versus the criminal share of all crypto activity from 2017 to 2020. The data shows that in 2019, 2.1% of total crypto transaction volume worth $2.1 billion was linked to criminal activity. In 2020, the amount fell to $10 billion representing 0.34% of total crypto transactions volume.
“One reason the percentage of criminal activity fell is because overall economic activity nearly tripled between 2019 and 2020.”
Ransomware Crypto-Crimes Dominated In 2020
Crypto Scams like the infamous PlusToken Ponzi scheme accounted for 54% worth $2.4 billion of crypto-related crime in 2019. However, in 2020, such crypto scams reduced significantly and were replaced by darknet markets which rose to $1.7 billion from $1.3 billion in 2019 but ransomware attacks on individuals and organizations overshadowed the market.
“The big story for cryptocurrency-based crime in 2020 is ransomware.”
Chainalysis stated that ransomware crimes increased by 311% from 2019 despite representing only 7% ($350 million) of all funds received by addresses linked to criminal activity. In 2020 alone ZyCrypto reported over 10 instances of collective ransomware victims around the world.
“No other category of cryptocurrency-based crime rose so dramatically in 2020, as COVID-prompted work from home measures opened up new vulnerabilities for many organizations.”
The data also indicates that the figure could be higher due to underreporting by some of the targeted victims and the figures may rise especially after more addresses are identified from ongoing investigations of new and suspected addresses in the last months of 2020.
The report concludes that ransomware attacks are the most destructive type of crypto-crimes due to their economic impact and ability to disrupt critical industries and services, and risking private or sensitive information.
“When we consider the total economic losses not just from payments, but from businesses and governments being taken offline in attacks, some experts estimate that ransomware cost $20 billion in economic losses in 2020.”