The number of crypto crimes triples every year - but is it all bad?

The United States is at the center of rising crime rates, but Australia and England are also having problems.

• Ransomware was a major driver of this rise.
• For their lack of regulatory oversight, criminal gangs resort to privacy-focused altcoins like Monero.
• Statistics may not accurately reflect actual crime rates.
• A recent arrest in Ukraine of a multi-million dollar ransomware gang is a good sign. According to Crypto Head, cryptocurrency crimes have increased by around 2017% per year since 300.

What is the crime in cryptocurrencies and why are they so popular?

Ransomware is a major contributor to rising crime rates. Cryptocurrency prefers it to traditional large-scale extortion methods due to its anonymity and convenience. There is no central control.

Nicholas Weaver is a senior research fellow at the University of Berkeley. He said cryptocurrency was the only way to pay ransomware providers due to bank wire transfer regulations and banking services.

Decentralized finance has been plagued with fear of crime for many years, beyond ransomware. Europol, the law enforcement agency of the European Union, found that billions of pounds had been recycled from cryptocurrencies in Europe in 2018.

Even though most of the transactions are done by ordinary people, and the quotations of the strongest cryptocurrencies are on the rise. 

The impacts of cryptographic crime

The statistics may not reflect the actual crime rate.

According to Crypto Head, some victims may not be able to understand or report the crime. The SEC, CFTC and IRS "all assert regulatory oversight of cryptocurrency" in America. However, each of these authorities does so only in "certain circumstances", thus aggravating the problem.

The impact of cryptocurrency crime will be felt for many years.

Michael Phelan (head of the Australian Criminal Intelligence Commission) said in April that the growing difficulty in tracking down illicit cryptocurrency transactions would exhaust resources for intelligence agencies. 

UK banks may soon need to provide additional funds to offset potential losses from high-risk crypto assets.

The other side of the coin

• Cryptocurrency is used by only a small percentage of criminals.
• Independent companies like CipherTrace work to thwart and track crypto criminals.
• Digital crime is becoming more difficult for law enforcement.
• It is easier to track down criminal gangs moving into cryptocurrency using cash.
• Even though ransomware has seen a surge in popularity, criminals still make up a small percentage of ransomware users. According to a 2018 report from the Foundation for Defense of Democracies, illegal activities accounted for less than 1% of all transactions. This number is decreasing from year to year. Oxford Law conducted a similar study in 2018. It found a 44% higher percentage, but it was only Bitcoin and not across the entire cryptocurrency spectrum.

Industry leaders speak for themselves

Numerous leading figures in the cryptocurrency have expressed their disapproval of its links to crime.

Hunter Horsley, CEO of Bitwise Asset Management, said earlier this month that bitcoin is bad for crime. He cited statistics from Chainalysis which showed a steep drop in crypto crimes between 2019 and 2020.

Technology analyst firm CipherTrace also noted a decline in digital asset theft. Instead, fraud has increased. 

It has become more common to use cryptocurrency for criminal activity. CipherTrace discovered “more than 72.000 unique Iranian IP addresses” centered in Tehran. These addresses were used for illegal transactions.