Bitcoin for drugs and terrorism? Chainalysis proves otherwise
Illegal crypto transactions are down in 2020. That’s according to a report by analytics firm Chainalysis.
In times when Bitcoin and Co. are posting new all-time highs every few weeks and days, crypto critics are also getting louder. They sometimes call for heavy regulation. The reasoning: The Bitcoin System digital assets serve illegal purposes, for example, they are used to finance international terrorism, as anonymous means of payment in the drug trade and for buying and selling weapons.
But what is behind these accusations?
The new Crypto-Crime Report for 2020 by the analysis company Chainalysis shows that the share of criminal crypto-transactions declined. Thus, the transfer volume corresponded to approximately 10 billion US dollars, which in total represented about 0.34 per cent of all crypto transfers. Compared to 2019 (US$21.4 billion, 2.1 per cent), this was a decrease of 1.76 per cent. In this regard, the analysis company mentioned that the share of illegal crypto activities could, however, increase again in the future. This had already been determined in the previous year’s report. There, they initially assumed a total criminal share of 1.1 per cent. In the course of the year, however, new cases became known, which is why the data had to be corrected upwards. If one assumes the same dynamics as in 2019, the share could rise to about 0.7 per cent. Exactly how high the increase will be is unclear. That there will be one, however, is likely, according to Chainalysis.
According to the report, the shares of various illegal crypto activities have hardly changed compared to 2019. For example, fraud and activities on darknet markets still accounted for the majority of illegal transfers. The biggest surprise of the year came from the third place „ransomware“. Although ransomware accounted for „only“ 7 per cent of all criminal crypto transfers in 2020, compared to the previous year, this was an increase of 311 per cent to now 350 million US dollars.
The American analysis company also examined money laundering activities in connection with cryptocurrencies. It came to the conclusion that most funds were laundered through a small group of service providers. These included classic money laundering service providers as well as cryptocurrency and fiat currency service providers with insufficient compliance rules. According to Chainalysis, law enforcement agencies should start here and target these providers.