Black market cryptocurrency flows hit $20bn last year amid US sanctions blitz

Black-market cryptocurrency flows hit a record $20 billion last year, with online scammers, dark-net retailers, thieves, ransomware attackers and those under US sanctions the top beneficiaries, a new study shows.

Research from blockchain analytics firm Chainalysis on Thursday showed the volume of dodgy crypto flows grew in 2022 even as the overall market shrank amid high-profile scandals in the sector and a broader economic slump.

The growth in crooked transactions, together with the collapse of crypto exchange FTX and fraud charges against its founder Sam Bankman-Fried, have further eroded the appeal of the poorly regulated digital currency market.

'The events of this year have made clear that although blockchains are inherently transparent, the industry has room for improvement,' researchers said ahead of the release of the complete report next month.

The volume of dodgy crypto flows grew in 2022 even as the overall market shrank amid high-profile scandals in the sector and a broader economic slump

Illicit crypto wallets received 0.24 percent of all crypto transactions last year — double the prior year's 0.12 percent share

Illicit crypto wallets received $20.1 billion in crypto assets last year, or 0.24 percent of all crypto transactions — double the prior year's 0.12 percent share as a portion of total volume, says the study.

Last year's surge is due mostly to the rise of sanctioned crypto addresses — those transactions jumped more than 100,000-fold last year and made up 44 percent of illicit activity, Chainalysis said.

Regulators have targeted Crypto addresses for years, but the pace of sanctions designations by the US Treasury Department's Office of Foreign Assets Control (OFAC) shot up after Russia's invasion of Ukraine last February.

Funds received by the Russian exchange Garantex, which was sanctioned by the US Treasury in April, accounted for 'much of 2022's illicit volume', researchers said, adding that most of that activity was 'likely Russian users using a Russian exchange.'

The US also slapped sanctions on crypto mixing services Tornado Cash and Blender, which it said were being used by hackers, including from North Korea, to launder billions of dollars worth of proceeds from their cyber crimes.

The volume of stolen crypto funds rose 7 percent in 2022, but other illicit crypto flows including those related to scams, ransomware, terrorism financing and human trafficking, saw volumes fall.

Researchers omitted the 10,012,224 percent rise in sanctions-related transactions from 2021 to 2022 because it was, literally, off the chart

The growth in crooked transactions, together with the collapse of crypto exchange FTX and fraud charges against its founder Sam Bankman-Fried, have further eroded the appeal of the poorly regulated digital currency market