Značka: Chainalysis

Crypto money laundering up by one third in 2021 but still below record

A new Chainalysis report has revealed that $8.6 billion in value was laundered through cryptocurrency in 2021. It marks a 25% increase from 2020, but still remains well below the high watermark hit in 2019. That year $10.9 billion in value was laundered via cryptocurrency. Since 2017, Chainalysis estimates that a total of $33.4 billion in crypto has been laundered.Chainalysis points out the $33.4 billion in crypto laundered since 2017 pales in comparison to the estimated $2 trillion in fiat is laundered yearly from offline crimes such as drug trafficking. However, a reliable assessment of the amount of fiat laundered is more difficult to determine than crypto due to the use of untraceable cash in offline crimes. The report states:“The biggest difference between fiat and cryptocurrency-based money laundering is that, due to the inherent transparency of blockchains, we can more easily trace how criminals move cryptocurrency between wallets and services in their efforts to convert their funds into cash.”According to the cybersecurity analytics provider the value of the laundered crypto was derived from “crypto-native crimes” in which “profits are virtually always derived in cryptocurrency rather than fiat currency.”For the first time since 2018, centralized exchanges (CEX) accounted for less than half (47%) of the value laundered, signalling a potential change in cyber criminals’ behavior. DeFi protocols saw their utility for illicit addresses increase nearly 2,000% from a 2% share in 2020 to 17% in 2021.Hackers, such as the infamous North Koreans who stole about $400 million, strongly preferred DeFi while scammers tended to prefer CEX, which Chainalysis attributes to a “relative lack of sophistication.”Chainalysis said, “Mining pools, high-risk exchanges, and mixers also saw substantial increases in value received from illicit addresses as well.”Of the funds laundered in 2021, a greater proportion arrived at the top-five laundering services in 2021 (58%) than in 2020 (54%). The overall concentration of money laundering, however, decreased in 2021 as 583 addresses received deposits of at least $1 million in value while in 2020, 270 such addresses were used.Related: Crypto crime’s overall impact set to fall even further in 2022: ChainalysisBy asset, altcoins saw the largest amount of concentration as 68% of those laundered went to the 20 largest deposit addresses used for illicit activity. Ethereum (ETH) was next with 63%, stablecoins at 57%, and Bitcoin (BTC) was by far the least concentrated with only 19% going to the top addresses.

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'Less sophisticated' malware is stealing millions: Chainalysis

Cryptojacking accounted for 73% of the total value received by malware related addresses between 2017 and 2021, according to a new malware report from blockchain analysis firm Chainalysis.Malware is used to conduct nefarious activity on a victim’s device such as a smartphone or PC after being downloaded without the victim’s knowledge. Malware-powered crime can be anything from information-stealing to denial-of-service (DDoS) attacks or ad fraud on a grand scale. The report excluded ransomware, which involves an initial use of hacks and malware to leverage ransom payments from vicitms in order to halt the attacks. Chainalysis stated:“While most tend to focus on high-profile ransomware attacks against big corporations and government agencies, cybercriminals are using less sophisticated types of malware to steal millions in cryptocurrency from individual holders.”Chainalysis’ Jan. 19 report focuses on the various types of crypto-malware, excluding ransomware, used over the last decade such as info stealers, clippers, cryptojackers and trojans, noting that they are generally cheap to acquire and even “low-skilled cybercriminals” can use them to siphon funds from their victims. Cryptojacking tops the list of value received via malware at 73%, Trojans were ranked second at 19%, ‘Others’ totalled 5% while information stealers and clippers represented a mere 1% each. According to Chainalysis, malware addresses send the “majority of funds on to addresses at centralized exchanges,” but note that figure is declining. As of 2021, exchanges only received 54% of funds from those addresses compared to 75% in 2020 and around 90% in 2019.“DeFi protocols make up much of the difference at 20% in 2021, after having received a negligible share of malware funds in 2020.”The report looked at the prolific Hackboss clipper that has stolen around $560,000 since 2012 by infecting user’s clipboards to steal and replace information. It found that the “Cryptobot” infostealer was significant source source of ill-gotten gains in 2021, generating $500,000 worth of Bitcoin (BTC) from around 2,000 transactions. CryptojackingCryptojacking malware utilizes the victim’s computing power to mine various cryptocurrencies, with the target asset of choice “usually Monero” but Zcash (ZEC) and Ethereum (ETH) are sometimes also mined. Chainalysis notes that a specific amount generated by this method is hard to pin down as the funds are transferred from mempools to unknown mining addresses as opposed to “the victim’s wallet to a new wallet” in other cases. Despite being unable to provide an estimated monetary figure on the harm caused by cryptojackers, Chainalysis projects this malware type to account for almost three quarters of the total value generated by crypto-malware. The report noted a 2020 report from Cisco’s cloud security division stated that cryptojacking affected 69% of its clients, thus translating to an “incredible amount of stolen computer power” used to mine large amounts of crypto. It also highlighted a 2018 report from Palo Alto Networks which estimated that 5% of Monero’s circulating supply was mined by cryptojackers, estimated to be worth around $100 million in ill-gotten revenue. Related: Crypto.com breach may be worth up to $33M, suggests onchain analystInfo Stealer and clippers Info stealers are used to swipe the victim’s crypto wallet info and account credentials, while clippers can be used to insert a specific text into the victim’s clipboard.Clipper malware is often used to hijack the victim’s outgoing transactions by inserting the cybercriminal’s wallet address when victims attempt to paste a sending address. The report noted that these two types of malware received a combined 5,974 transfers from victims in 2021, up from 5,449 in the year prior.

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North Korean hackers stole $400M in 2021, mostly ETH: Chainalysis

North Korean crypto hackers siphoned off nearly $400 million in crypto through cyber attacks in 2021 according to new data from Chainalysis.The type of crypto stolen has also seen a sea change according to the Jan. 13 report from the blockchain analytics firm. In 2017, BTC accounted for nearly all the crypto stolen by the DPRK, but it now accounts for just one fifth:“In 2021, only 20% of the stolen funds were Bitcoin, whereas 22% were either ERC-20 tokens or altcoins. And for the first time ever, Ether accounted for a majority of the funds stolen at 58%.”The report stated that attacks in 2021 from North Korea (DPRK) primarily targeted “investment firms and centralized exchanges, and made use of phishing lures, code exploits, malware, and advanced social engineering” to maliciously acquire the funds. Stolen cryptocurrency is believed to be used by the DPRK to evade economic sanctions and to help fund nuclear weapons and ballistic missile programs, according to a UN Security Council report.The threat that the DPRK presents to global crypto platforms has become ever-present. Chainalysis now refers to hackers from the Hermit Kingdom, such as Lazarus Group, as advanced persistent threats (APT). These threats have been on the increase over the past three years, following the all-time high of over $500 million in crypto stolen in 2018.Chainalysis reported that the funds were meticulously laundered. Methods range from chain hopping, the ‘Peel Chain’ method, and more recently the hackers have employed a complicated system of coin swaps and mixing.Related: LCX loses $6.8M in a hot wallet compromise over Ethereum blockchainMixers were used on over 65% of the funds stolen in 2021, which is a 3-fold increase since 2019. A mixer is a software-based privacy system that allows users to hide the source and destination of the coins they send. Decentralized exchanges (DEX) are increasingly preferred by hackers since they are permissionless and have ample liquidity for coins to be swapped at the user’s will.Chainalysis used the Aug. 19, 2021 hack at Liquid.com in which $91 million in crypto was stolen as an example of the typical way in which DPRK hackers launder funds. They first swapped ERC-20 coins for Ether (ETH) at decentralized exchanges. Then the ETH was sent to a mixer and swapped for Bitcoin (BTC), which was also mixed. Finally, BTC was sent from the mixer to centralized Asian exchanges as a likely fiat off-ramp.

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Crypto crime’s overall impact set to fall even further in 2022: Chainalysis

The coming year is likely to see crypto related crime reduce to an ever smaller share of the overall industry as law enforcement takes greater advantage of the transparency provided by blockchain technology, says Kim Grauer, Director of Research at Chainalysis. According to a January 6 report from Chainalysis, the growth of legitimate cryptocurrency usage is “far outpacing the growth of criminal usage.” The share of cryptocurrency transaction volume associated with illicit activity has never been lower, representing just 0.15% of transaction volume in 2021.She told Cointelegraph that barring any “outlier criminal events,” she expected that the growth of legitimate crypto usage over illegitimate usage would continue to accelerate through 2022. She said that things are looking hopeful in the space as “the illicit share of transaction volume continues to fall” and “the narrative that crypto is primarily a means for criminals to transact is finally being put to bed.”“Law enforcement wins continue to demonstrate to bad actors that cryptocurrency’s inherent transparency makes it an undesirable means for transferring illicit funds. Cash is still king when it comes to illicit finance, and that is not likely to change.”During 2021, rug pulls became crypto-criminals’ scam of choice. Scamming revenue rose 82% in 2021 to $7.8 billion, with over $2.8 billion of this total coming from rug pulls alone.However, Grauer said that this doesn’t necessarily indicate rug pulls will remain the most prevalent scam during 2022. Rather, criminals are likely to “abuse newer technologies” like DeFi, NFTs and DAOs as the space moves towards web3. “We saw this [in 2021] especially with DeFi, where criminals not only targeted DeFi platforms for attacks such as through hacks or rug pulls, but started increasingly using DeFi platforms to launder money.”Additionally, Grauer suggested that while she didn’t expect a potential crypto bear market would affect the rate, or type, of crypto crime, a major financial recession or depression could. “When you consider overall economic markets — not just crypto — recessions and depressions can drive an increase in criminal activity,” she said. Related: Retail buyers made up more than 80% of NFT transactions in 2021: ChainalysisDuring 2021, law enforcement agencies around the world had many notable successes. In Nov. 2021, the IRS Criminal Investigations announced that it had seized over $3.5 billion worth of cryptocurrency in 2021 from non-tax investigations. While the proportion was lower, cryptocurrency-based crime actually hit a new all-time high in 2021, with illicit addresses receiving $14 billion over the course of the year, up from $7.8 billion in 2020 according to Chainalysis.

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Robinhood partners with Chainalysis ahead of crypto wallet launch

Blockchain analytics firm Chainalysis will be partnering with Robinhood to provide data and tools for trading in advance of the app launching its crypto wallet.In a Monday announcement, Chainalysis said the integrated partnership with Robinhood Crypto will help the trading app meet compliance requirements ahead of the launch of its crypto wallet, expected to roll out for all users in early 2022. According to Robinhood, the platform will adopt Chainalysis’ Know-Your-Transaction, the firm’s monitoring compliance solution, in addition to Chainalysis Reactor, its investigations software. The trading app also said its teams would be using Chainalysis’ certification programs to achieve compliance.“Chainalysis works closely with regulators and law enforcement to develop industry best practices and that approach is aligned with Robinhood’s commitment to working with policymakers in a collaborative manner,” said Robinhood Crypto’s head of partnerships Ben Einstein.According to Robinhood, more than 1.6 million people are on the waitlist for a wallet which will support depositing and withdrawing Bitcoin (BTC), Ether (ETH), Dogecoin (DOGE), and other tokens. The trading app has been testing its digital wallet feature since it was first announced in September.First alpha transfer #WalletsAlpha https://t.co/nxOL23leGM— VLAD (@vladtenev) November 22, 2021Many government agencies and companies in the private sector employ Chainalysis as a solution to track both legitimate and illicit crypto transactions. When the U.S. Department of the Treasury announced it would impose sanctions on the Czech Republic and Russia-based business Suex OTC, it cited an investigation from the analytics firm.Related: BitMEX turns to Chainalysis to solve legal woes, or at least soften the CFTC’s blowAfter going public on the Nasdaq in July, the share price of Robinhood (HOOD) has steadily declined from an all-time high of $70.39 on Aug. 4 to $21.83 at the time of publication, a drop of roughly 70%.

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Retail buyers made up more than 80% of NFT transactions in 2021: Chainalysis

More than 80% of all nonfungible token (NFT) transactions were worth less than $10,000 in 2021 according to Chainalysis which categorized them as “retail” in recent research.A Dec. 6 report from blockchain analytics firm Chainalysis titled “The 2021 NFT Market Explained” detailed NFT transaction trends throughout 2021. Researchers at Chainalysis studied on-chain data between January and October 2021. While retail transactions accounted for more than 80% of all NFT transactions on any given day in 2021, collector-sized transactions rose from 6% in March to 19% by Oct. 31 indicating an increase in larger collectors as the year progressed. Institutional-sized transactions accounted for less than 1% of all transfers but made up 26% of the actual trading volume during the period, it added.A retail-sized transaction is one worth less than $10,000 while a collector-sized transaction is worth between $10,000 and $100,000. An institutional-sized transaction is one worth more than $100,000 according to the research.The chart below shows the dominance of retail transactions throughout the year from January to October, with a definitive uptick in collector-sized transactions beginning by September.NFT transaction size share – ChainalysisThe share of total transfers was mostly made up by retail, but collectors and institutions have made up the lion’s share of NFT dollar-denominated transfer volume since March. Collector-sized transactions made up 63% of the volume and institution-sized transactions made up 26%, meaning retail transfers came to 11% of the volume for the time period studied.NFT transfer volume share – ChainalysisThe researchers contrasted the NFT market with the wider cryptocurrency market, where retail transactions make up a far smaller proportion of the total transactions.“The data shows that the NFT market is far more retail-driven than the traditional cryptocurrency market, where retail transactions make up a negligible share of all transaction volume.”The earning potential associated with NFTs was among several factors that drove cryptocurrency adoption through 2021. That is evidenced by the record $17.7 billion in NFT sales expected through 2021, according to a report from Cointelegraph Research.In the past week alone, NFT sales amounted to $300 million, nearly a quarter of which came from metaverse land purchases at The Sandbox.Additionally, there has been at least $26.9 billion in cryptocurrency sent to ERC-721 and ERC-1155 (the industry dominant Ethereum standards for NFTs) contracts through 2021 according to Chainalysis. Related: Binance Smart Chain and Animoca Brands form $200M fund for GameFi projectsWhitelisting best for profits Despite the tremendous amount of money being spent on NFTs, the report stated that “just 28.5% of NFTs purchased during minting and then sold on the platform result in a profit.” Chainalysis suggested getting whitelisted to increase the chances of turning a profit from a newly-minted NFT. Users who made the whitelist on a minting event on OpenSea turned a profit 75.7% of the time versus the 20.8% who did so without being whitelisted. “The data suggests it’s nearly impossible to achieve outsized returns on minting purchases without being whitelisted.”However, NFTs bought on the secondary market after minting “leads to profit 65.1% of the time,” the report added, suggesting that if one cannot make the whitelist, it is better to wait for an NFT collection to hit a secondary marketplace rather than participating in a minting event.

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