Cryptocurrency used for money laundering, theft, report finds

This figure represents only 0.15 per cent of cryptocurrency that exchanged hands last year, down from 0.62 per cent in 2020. Despite the record illicit trade value, cryptocurrencies have gradually entered the mainstream and therefore transactions related to crime account for an increasingly smaller proportion of trade.

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The research estimates that $A12 billion was laundered in cryptocurrency in 2021, a 30 per cent increase from 2020. Chainalysis also claims the cryptocurrency money laundering industry is a highly concentrated one that is gradually diversifying.

Naturally, this increased level of money laundering means that more criminal funds are being shifted to cryptocurrency wallets. The report estimates that criminals held around $A15 billion worth of funds with known illicit sources, up almost fourfold in one year.

The Australian Consumer and Competition Commission last year warned that cryptocurrency was the most common type of investing scam Australians faced, making up more than half of losses.

“Investment scams are more prevalent than ever, and scammers are capitalising on interest in cryptocurrency in particular,” ACCC Deputy Chair Delia Rickard said at the time.

“More than half of the $A70 million in losses were to cryptocurrency, especially through bitcoin, and cryptocurrency scams were also the most commonly reported type of investment scam, with 2240 reports.”

The report also stated that “North Korean cybercriminals had a banner year in 2021, launching at least seven attacks on cryptocurrency platforms that extracted nearly $US400 million ($A556 million) worth of digital assets last year”.

North Korea is known to host the “Lazarus Group”, an outfit the US FBI describes as a “state-sponsored hacking organisation”. The group was made infamous by notable breaches including the 2014 Sony Pictures hack, and has reportedly pivoted to cryptocurrency hacking to make income for the cash-strapped regime.

The report takes stock of a rapidly changing cryptocurrency environment.

Governments around the world are trying to keep pace with the new platform in order to apply the same level of probity and oversight as they apply to traditional financial institutions and systems.

Recently, the US Department of Justice seized a record $A5 billion worth of bitcoin and accused a couple of conspiring to launder 119,754 bitcoin stolen in the 2016 Bitfinex hack, worth $A7.3 billion at the time this article was published.