Crypto Transparency Helps Measure Criminal Involvement: Chainalysis CEO

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Crypto Transparency Helps Maintain Criminal Involvement: Chainalysis CEO

As digital assets continue to grow, the ability to track illicit activity has improved, making it possible to measure criminal involvement in crypto with surprising precision, Chainalysis CEO Michael Gronager said in a recent interview with CNBC.

On 18 September 2024, Gronager claimed that criminal activity in crypto now represents only a small fraction of total transactions—around 0.34%, or 30 to 40 basis points. In contrast, criminal activity “represented 10-13% of transactions over a decade ago.”

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Scams Continue To Plague Crypto

One of the major forms of criminal activity within the crypto ecosystem today is scams, particularly romance scams, where individuals are tricked into sending money to people they believe they have formed a relationship with online.

“It’s a huge industry, a huge criminal industry,” Gronager said, noting that romance scams have become one of the most prevalent forms of crypto-related fraud in the past year.

Although the absolute numbers of criminal activities have increased, their proportion relative to overall blockchain usage has dramatically decreased as cryptocurrency adoption has surged.

“In terms of usage of the blockchain, that’s going up way faster. If you go back 10 years, you were counting in double-digit percentages,” he said.

One of the driving forces behind crypto’s expansion is its accessibility. In regions like India and Indonesia, crypto adoption is increasing, even though these countries have imposed strict regulations.

Despite this, “crypto is unique in the sense that it happens anyhow, and you can get access to cryptocurrencies from buying it on the streets, or through apps from other countries.” This makes it difficult to fully prevent people from accessing digital currencies.

In China, over-the-counter (OTC) platforms have become a method for citizens to move money outside the country, avoiding capital controls. This has been particularly relevant amid economic uncertainty and concerns over the country’s property sector.

“If they have the opportunity to use crypto to transfer funds outside of China, that will also happen, and it is happening in increasing ways,” the expert observed.

As cryptocurrency continues to expand globally, the challenge of regulating its widespread use remains, Gronager concluded. However, he noted that the transparency of blockchain technology provides an invaluable tool for tracking criminal activity.

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Cybercriminals Netted $1.6B In First Half of 2024

Despite growing regulatory efforts, cybercriminals netted nearly $1.6 billion in the first half of 2024, according to a report by Chainalysis, marking a sharp increase from $857 million during the same period in 2023.

In August, crypto-related scams surged, leading to a total of $310 million in losses from various exploits, marking the second-highest monthly figure this year.

Phishing was the most harmful type of attack, responsible for about $293 million of the total losses. Two major phishing incidents alone resulted in the theft of $238 million in Bitcoin and $55 million in DAI stablecoin.

Aside from phishing, several crypto projects also experienced significant attacks in August.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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Ruholamin Haqshanas

Ruholamin Haqshanas is an accomplished crypto and finance journalist with over three years of experience. He has been featured in various high-profile outlets, including Cryptonews.com, Investing.com, 24/7 Wall St, and Business2Community. Read More

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