Crypto crime soars to record high of at least $20.1B in 2022

The cryptocurrency markets might have taken a beating last year, but digital tokens' popularity with criminals soared to a new record, according to a fresh analysis.

Research released Thursday by blockchain data platform Chainalysis shows that illicit transaction volume using digital currencies reached an all-time high of $20.1 billion in 2022 – and the report emphasized that the figure is on the low end.

"This year marked a new all-time high in crypto illicit activity, with volumes soaring to $20.1 billion," Chainalysis Director of Research Kim Grauer told FOX Business. "It’s important to note that this number is a lower-bound estimate that will likely increase as we identify new addresses associated with illicit activity. Even so, illicit activity continues to reflect a small fraction of total cryptocurrency volumes at less than 1%."

Grauer added, "A core element behind this record-breaking number is the U.S. Treasury’s most ambitious crypto sanctions program yet."

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A significant chunk of the illicit transaction volume (44%) came from activity associated with sanctioned entities, which saw a 10,000,000% surge from 2021 to 2022 – a majority of which were carried out on Russia-based crypto exchange Garantex. The platform "has been able to continue operating with impunity," Chainalysis said, despite being sanctioned by the Office of Foreign Assets Control of the U.S. Treasury Department.

Theft of crypto funds also rose year over year but by a much smaller margin at 7%. Transaction volumes for all other crimes measured – such as terrorism financing, ransomware, human trafficking and scams – all fell.

Still, the report made clear there is a likelihood that the 2022 estimate could rise. The initial figure for 2021 found roughly $14 billion in illicit crypto activity for the year, and that number has now been raised to $18 billion after the discovery of new crypto scams.

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Chainalysis did not include transactions purportedly carried out under alleged fraud or off-chain bookkeeping in 2021 that have not been prosecuted, such as in the high-profile implosions of several crypto firms like FTX.

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"The bankruptcy and criminal cases associated with these collapses are still ongoing," the analysts wrote. "So for the time being, we’ll leave questions of criminality to the legal system."