Illegal Transactions On Blockchain Reaches Record $20.1B
• In 2022, illicit on-chain transactions set a new record of $20.1 billion.
• 44% of these transactions were related to sanctioned entities.
• The U.S. Office of Foreign Assets Control (OFAC) launched some of its most difficult-to-enforce crypto sanctions last year.
In 2022, the world witnessed an unprecedented increase in illicit on-chain transactions. According to a Jan. 12 report from Chainalysis, the total cryptocurrency value received by illicit addresses reached $20.1 billion last year, setting aside the criminal investigations of failed crypto businesses like FTX, Celsius, Three Arrows Capital, Terraform Labs and others. This was a 10% increase from the previous year and a staggering 60% increase from 2020.
The abnormal number of illicit transactions can be attributed to the equally record-breaking scale of international sanctions. In particular, the U.S. Office of Foreign Assets Control (OFAC) launched some of its most difficult-to-enforce crypto sanctions last year. These sanctions led to a drastic increase in the volume of sanctions-related transactions, with Chainalysis estimating that this growth was in the 10 million mark.
The situation is made even more concerning by the fact that the $20.1 billion does not include proceeds from non-crypto native crimes like drug trafficking or the funds on the balance of the failed companies, which are now under investigation in various jurisdictions around the globe. This means that the actual figure is likely to be even higher.
It is clear that the world is in dire need of better regulations and enforcement of existing laws in order to combat the rise of illicit on-chain transactions. Until such measures are taken, the world will continue to be exposed to the risk of money laundering and other criminal activities taking place on the blockchain.