Now that a new year is upon us, Chainalysis has released 2022 data on illicit activity in the cryptocurrency ecosystem. If this analysis is very instructive, we will however note its limits which allow us to qualify the figures put forward.
The state of illicit transactions in cryptocurrencies in 2022
This week, Chainalysis published an excerpt from its report due out in February on illicit transactions in cryptocurrencies in 2022.
If the latter have unfortunately increased since 2021, however, they remain marginal at 0.24% of the total volume or the equivalent of a 416 transaction:
Figure 1 – Volume of illicit transactions in 2022 on cryptocurrencies
In terms of value, that’s $20.1 billion. If this data is indeed substantial, it should be rescaled, recalling for example that over the last 24 hours, Binance has generated more than $31 billion in spot trading volume.
If we look more closely at the activities that make up this study, we notice that 44% of volume involves transactions on addresses sanctioned by the Office of Foreign Assets Control (OFAC) of the US Treasury:
Figure 2 – Details of the types of illicit transactions
This data on OFAC’s sanctions is interesting, because it turns out that a large part of this 44% concerns the Russian exchange Garantexsanctioned in April 2022. As these sanctions taken by OFAC apply, in theory, only to American citizens, nothing prohibits Russians to use this local platform legally in their own jurisdictionwhich will however feed the data collected by Chainalysis.
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The nuances to consider in this data
In addition to the Garantex case, the Chainalysis analysis includes a few subtleties that qualify the data presented. First of all, this study only concerns on-chain datawhich are moreover the only verifiable ones with certainty.
This implies that transactions internal to an exchange, which are recorded in an account book outside the blockchain, cannot be taken into account. This then opens the debate on the activities of FTX, Celsius where other companies having defrauded in 2022, but whose activities are not reflected in the analysis.
It should also be noted that certain activities are difficult to quantify, such as the payment of drugs in cryptocurrencies, which can be compared to a simple transaction from an on-chain point of view.
Nevertheless, numbers are changing as Chainalysis finds new methods to monitor the full range of illicit activities in the ecosystem. Thus, if for example the value of 14 billion dollars was initially advanced for 2021, an update with new calculations brought this figure to 18 billion.
On the other hand, it would be easy to make a shortcut by saying that “illicit activity doubled in 2022», because we went from 0.12 to 0.24% of transactions. Nevertheless, such reasoning would be fallacious.. Indeed, if the criminal industry knows no respite, the cryptocurrency market has indeed experienced a drop in activity in 2022. Based on this observation, this mechanically increases the share of illicit transactions in the total volume. .
👉 Also in the news – SEC accuses Gemini and Genesis for their activities with retail investors
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Source: Chainalysis
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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