Crypto criminals, who are stealing the digital currency from enterprises, are among the biggest holdlers of cryptocurrencies across the globe, accounting for 3.7 percent of the total crypto whales in 2021, said a report.
Crypto whales are investors who have $1 million or more in their private wallet. According to blockchain analytics firm Chainalysis, that tracks criminal activities linked to cryptocurrency transactions, there are 4,068 criminal whales, which is around 3.7 percent of the crypto whales, who are hodling over $25 billion (around Rs 1.87 lakh crore) worth of crypto tokens among them.
In crypto parlance, hodling is a term used for users holding on to large sums of crypto currencies with the hope of future profits, and not selling them.
In its Crypto Crimes Report 2022, Chainalysis said cryptocurrency holdings among cyber criminals, called criminal balance, jumped from around $3 billion in 2020 to over $11 billion in 2021. Most of this was dominated by stolen funds, which contributed $9.8 billion (or 83 percent) of all crypto holdings with criminals in 2021.
According to the data provided by Chainalysis, 1,374 whales received 10-25 percent of their balance from nefarious sources and 1,361 received 90-100 percent of their total balance from illicit addresses.
There has been a rampant rise in cryptocurrency crimes in 2021, especially stolen funds, the report claimed. Illicit transactions touched an all-time high, surging nearly 80 percent to $14 billion from $7.8 billion in 2020. However, overall transaction volume also rose by a whopping 567 percent, indicating that legitimate transactions outpaced criminal activities.
The decentralised finance (DeFi) category, including DeFi projects, reported the highest number of criminal activities, information from crypto data tracker The Block revealed. According to the data, attackers stole funds by exploiting coding flaws in flash loans or non-collateralised cryptocurrency loans.
According to Chainalysis, blockchain infrastructure helps in tracking criminals in crypto-based crime more efficiently than fiat-based crime as crypto holdings can be quantified from one public data set.
In fiat currency crimes, offenders use a network of foreign banks and shell corporations to obfuscate their holdings. “But in cryptocurrency, transactions are saved on the blockchain for all to see,” Chainalysis said, adding that this helps government agencies track the criminals and bring them to justice.
