According to a report by blockchain data firm Chainalysis, by the end of 2021, cybercriminals owned more than $11 billion worth of cryptocurrencies, all linked to illicit activities, compared with just $3 billion in the same period last year. Chainalysis points out that the most lucrative crime is theft—stolen cryptocurrency accounts for 93 percent of criminals’ crypto wallets (about $9.8 billion).
To get the data, Chainalysis looked at how much cryptocurrency wallets were linked to criminals, representing wallets that received funds from darknet markets, ransomware operations, scams or cryptocurrency theft, all monitored by Chainalysis.
Illicit activity is the main way cybercriminals steal cryptocurrencies, but holdings are also more valuable due to the 2021 cryptocurrency bull run. According to Yahoo Finance data, despite the price slump over the past month, the value of popular coins has risen sharply from the end of 2020 to the end of 2021:
Bitcoin: Just over $29,000 at the end of 2020 and around $47,000 at the end of 2021.
Ethereum: Around $737 at the end of 2020 and around $3,700 at the end of 2021.
Monero: Around $156 in late 2020 and $250 in late 2021.
In other words, as long as they keep holding, most crypto criminals will have a surge in value at the beginning of 2021 by the end of the year. Criminals appear to be more aggressive in liquidating their ill-gotten gains in 2021, the report notes – Chainalysis says criminals hold cryptocurrencies an average of 75 percent less than in previous years.
Ransomware sellers are the quickest to sell, holding virtual currency for an average of 65 days in 2021, compared to a historical average of 468 days. Even darknet marketers, which previously averaged 1,252 days, will have an average hold time of more than 250 days in 2021. Online scammers are somewhere in between, holding virtual currencies for an average of more than 100 days in 2021.
As Chainalysis points out, tokens are not necessarily safe in criminals’ wallets, as law enforcement agencies are not sitting idly by, tracking criminals’ virtual wallets and potentially confiscating cryptocurrency. The year 2021 saw law enforcement seize large amounts of cryptocurrency allegedly linked to ransomware groups or Ponzi scheme promoters.
Less than 2 months into 2022, more action has already been seen: UK tax authorities seize some NFTs; US Department of Justice seizes $3.6 billion in bitcoin stolen during Bitfinex hack. No matter whether cryptocurrencies rise or fall next year, it is believed that criminals’ cryptocurrency holdings will be severely hit.