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A study by blockchain analytics firm Chainalysis found that cryptocurrency-related crime has declined significantly. The criminal share of all crypto activity fell to just 0.34% in 2020. This contradicts recent statements by US Treasury nominee Janet Yellen and ECB President Christine Lagarde that cryptocurrencies are mostly used for illegal financing.

Crypto Crime plummeted in 2020

Chainalysis shared some of the findings from its 2021 Crypto Crime Report this week. While it acknowledges that “cryptocurrency remains attractive to criminals mainly because of its pseudonymous nature and the ease with which it allows users to send money instantly anywhere in the world”, the blockchain analytics company explained:

The good news is that cryptocurrency-related crime has dropped significantly in 2020 … In 2020, the criminal share of all cryptocurrency activity dropped to just 0.34%, or $ 10.0 billion in transaction volume.

In comparison, the company explained that in 2019 “criminal activity accounted for 2.1% of the total cryptocurrency transaction volume, or approximately $ 21.4 billion in wire transfers.” Last year, “One of the reasons the rate of criminal activity has fallen is that total economic activity has nearly tripled between 2019 and 2020,” the company noted.

Crypto Crime dropped sharply to just 0.3% of all cryptocurrency activity in 2020
A graph showing the total crypto value sent and received by criminal entities and the criminal share of all crypto activity. Source: Chainalysis

Chainalysis noted that darknet markets were the second largest crime category. It accounted for $ 1.7 billion in cryptocurrency activity, up from $ 1.3 billion in the previous year. Ransomware accounted for just 7% of all money received by criminal addresses, which amounted to just under $ 350 million in cryptocurrency. Although small, ransomware saw a 311% increase from 2019.

Chainalysis’s findings contradict recent statements by Joe Biden’s choice of US Treasury Secretary Janet Yellen and ECB President Christine Lagarde. Yellen said Tuesday that many cryptocurrencies are being used “primarily for illegal financing.” Meanwhile, Lagarde said last week that bitcoin has had “funny business” and some “totally despicable money laundering activities”.

Several people in the crypto industry have pointed to the error of their statements, including a known one economist who called Lagarde’s statement “scandalous.” He stressed, “We all know that the vast majority of money laundering worldwide takes place in fiat currencies, particularly US dollars and euros.”

What do you think of the declining number of crypto criminals? Let us know in the comments below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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