Scamming revenues rose by 82 percent in 2021 to $7.8 billion worth of stolen cryptocurrency, an expert told Al Arabiya English, with Russia-based individuals and groups accounting for a disproportionate share of activity in crypto-based crime.
“Our analysis of what types of cryptocurrency-based crime increased the most in 2021 by transaction volume revealed that two categories stand out prominently: Stolen funds and, to a lesser degree, scams, with decentralized finance (DeFi) being a big part of the story for both,” said director of research at crypto research firm Chainalysis Kim Grauer.
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Chainalysis’ technology provides insight and anti-money laundering controls to help financial institutions establish compliance frameworks, and analyzes 100 percent of cryptocurrency transactions – which occur in public, immutable blockchains – to identify illicit activity.
“Scamming revenue rose 82 percent in 2021 to $7.8 billion worth of cryptocurrency stolen from victims.
“Over $2.8 billion of this total – which is nearly equal to the increase over 2020’s total – came from rug pulls, a relatively new scam type in which developers build what appear to be legitimate cryptocurrency projects, meaning they do more than simply set up wallets to receive cryptocurrency for, say, fraudulent investing opportunities, before taking investors’ money and disappearing,” Grauer explained.
According to Chainalysis, cryptocurrency theft grew by 516 percent between 2020 to 2021, a significant increase in crime which the company attributed the majority (72 percent) to decentralized finance.
Crypto crime, transaction volumes hit all-time high in 2021
Crypto-based crime 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, Grauer said, adding that “it is of course important to also take the fact that cryptocurrency usage is growing faster than ever before into context.”
The total transaction volume of cryptocurrencies grew to $15.8 trillion in 2021, up 567 percent from 2020’s levels.
“Given that soaring adoption, it’s no surprise that more cybercriminals are using cryptocurrency. But the fact that the increase was just 79 percent – nearly an order of magnitude lower than overall adoption – might be the biggest surprise of all,” Grauer said.
State-affiliated attackers
“Individuals and groups based in Russia — some of whom have been sanctioned by the United States in recent years — account for a disproportionate share of activity in several forms of cryptocurrency-based crime, particularly ransomware, darknet market and money laundering activities,” Grauer explained.
While Russia-affiliated attackers were prominent in this space, there were not the only ones using ransomware for “geopolitical ends.”
Cybersecurity analysts at Crowdstrike and Microsoft found that many attacks by ransomware strains affiliated with Iran were mostly targeting US, EU, and Israel-based companies. Such attacks were geared more towards causing disruption or “serving as a ruse to conceal espionage activity.”
“Chainalysis has seen significant growth over the last year in the number of ransomware strains attributed to Iranian cybercriminals — in fact, Iran accounts for more individual identified strains than any other country,” said Grauer.
The number of North Korean-linked hacks jumped from four in 2020 to seven in 2021, and the value extracted from these hacks grew by 40 percent.
“Our research also found that North Korean cybercriminals had a banner year in 2021, launching at least seven attacks on cryptocurrency platforms that extracted nearly $400 million worth of digital assets [in 2021],” she said, adding that these attacks mainly targeted investment firms and centralized exchanges and made use of “phishing lures, code exploits, malware, and advanced social engineering to syphon funds out of these organizations’ internet-connected wallets into DPRK [Democratic People's Republic of Korea]-controlled addresses.”
As soon as North Korea gained custody of these funds, they began a careful laundering process to cover up and cash out. In terms of the dollar value, Bitcoin now accounts for less than one-fourth of the cryptocurrencies stolen by the country.
Throughout 2021, only 20 percent of the stolen funds were Bitcoin, the rest were (Ethereum) ERC-20 tokens or altcoins.
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