A new report by Chainalysis claims that legitimate uses of crypto will outpace criminal usage in 2022. In the new report, the blockchain analysis firm found that total transaction volume has grown to $15.8 trillion in 2021, which was up 567% from the 2020 figure.
Growing Legitimate Crypto Uses
For a long time, law enforcement agencies have associated criminality with the crypto sector. This is although all financial crimes before the invention of crypto took place in fiat currencies. However, that could all change in 2022. According to a blog post by Chainalysis, legitimate use cases for crypto will outpace criminal usage in 2022.
The main driver of this is the acceptance of crypto by more countries across the world. Many are beginning to realize that blockchain technology offers some unique advantages compared to the existing fiat system.
The Level of Criminality Within Crypto Transactions
The study by Chainalysis found that illicit crypto transactions accounted for just 0.15% of all crypto transactions in 2021. It means that legitimate use cases for crypto already account for the bulk of all transactions. The blockchain analysis firm expects this trend to continue in 2022.
In the same study, the company found that scammers made away with over $14 billion worth of crypto in 2021. That represented a 79% rise from the $7.8 billion they stole in 2020. As of 2022, scammers hold around $10 billion in crypto addresses associated with illegal transactions.
One of the main reasons for the rise of crypto crime has been the growth of DeFi. Since the DeFi sector is still so young, many scammers have moved there to take advantage of the naivety of users of DeFi products. Besides that, DeFi protocols are still new and often suffer from a lack of proper security.
In another report released in December Chainalysis found that around 36% of victims of crypto crime lost their funds worth around $2.8 billion. A rug pull is a common type of scam where criminals will hype a project and then make off with the funds in a pump and dump operation. In total, the Chainalysis report found that crypto scams were up by 81% in 2021, compared to the 2020 figure.
Warning From The FBI
In November 2021, the FBI issued a warning to users of Bitcoin ATMs and QR codes. The FBI warned that scammers were using these ATMs and QR codes to steal funds from unsuspecting victims. According to the FBI, scammers would often disguise themselves as a government agency and request payments from victims.
They would send a QR code to victims and ask them to visit a crypto ATM where they can deposit funds. The scammers then ask them to use the QR code as the crypto address where they send the funds. According to the FBI, the scammers would maintain constant communication with the victims during the entire process.
The FBI warned potential victims to avoid sending funds to anyone with whom they have only spoken online. They also warned victims to be wary when a person claiming to be from a government agency claims to accept crypto.
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