Web3

The 2022 Crypto Crime Report✭

October 9, 2022

131 minutes

Reports

137 Views

The 2022 Crypto Crime Report

Crypto Crime Trends for 2022: Illicit Transaction Activity Reaches All-Time High in Value,
All-time Low in Share of All Cryptocurrency Activity Cryptocurrency-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. Total cryptocurrency value received by illicit addresses | 2017–2021 Malware

Terrorism financing

Cybercriminal administrator

Stolen funds
Fraud shop

Scam

Sanctions

Darknet market

Ransomware

Child abuse material

$15B
$14B

$11.7B
$10B
$7.8B

$5B

$4.6B

$4.4B

2017

2018

$0B
2019

2020

2021

Note: “Cybercriminal administrator” refers to addresses that have been attributed to individuals
connected to a cybercriminal organization, such as a darknet market.

But those numbers don’t tell the full story. Cryptocurrency usage is growing faster than
ever before. Across all cryptocurrencies tracked by Chainalysis, total transaction volume
grew to $15.8 trillion in 2021, up 567% from 2020’s totals. Given that roaring adoption,
it’s no surprise that more cybercriminals are using cryptocurrency. But the fact that the
increase in illicit transaction volume was just 79% — nearly an order of magnitude lower
than overall adoption — might be the biggest surprise of all.
In fact, with the growth of legitimate cryptocurrency usage far outpacing the growth
of criminal usage, illicit activity’s share of cryptocurrency transaction volume has never
been lower.

INTRODUCTION

THE 2022 CRYPTO CRIME REPORT

Illicit share of all cryptocurrency transaction volume | 2017–2021
4.00%

3.37%
3.00%

2.00%

1.42%
1.00%
0.76%

0.62%

0.15%

0.00%
2017

2018

2019

2020

2021

Transactions involving illicit addresses represented just 0.15% of cryptocurrency transaction
volume in 2021 despite the raw value of illicit transaction volume reaching its highest level
ever. As always, we have to caveat this figure and say that it is likely to rise as Chainalysis
identifies more addresses associated with illicit activity and incorporates their transaction
activity into our historical volumes. For instance, we found in our last Crypto Crime Report
that 0.34% of 2020’s cryptocurrency transaction volume was associated with illicit activity
— we’ve now raised that figure to 0.62%. Still, the yearly trends suggest that with the
exception of 2019 — an extreme outlier year for cryptocurrency-based crime largely due to
the PlusToken Ponzi scheme — crime is becoming a smaller and smaller part of the
cryptocurrency ecosystem. Law enforcement’s ability to combat cryptocurrency-based
crime is also evolving. We’ve seen several examples of this throughout 2021, from the CFTC
filing charges against several investment scams, to the FBI’s takedown of the prolific REvil
ransomware strain, to OFAC’s sanctioning of Suex and Chatex, two Russia-based
cryptocurrency services heavily involved in money laundering.
However, we also have to balance the positives of the growth of legal cryptocurrency
usage with the understanding that $14 billion worth of illicit activity represents a
significant problem. Criminal abuse of cryptocurrency creates huge impediments for
continued adoption, heightens the likelihood of restrictions being imposed by governments, and worst of all victimizes innocent people around the world. In this report,
we’ll explain exactly how and where cryptocurrency-based crime increased, dive into the
latest trends amongst different types of cybercriminals, and tell you how cryptocurrency
businesses and law enforcement agencies around the world are responding. But first, let’s
look at a few of the key trends in cryptocurrency-based crime.

INTRODUCTION

THE 2022 CRYPTO CRIME REPORT

DeFi’s rise leads to new opportunities in crypto crime
What’s changed in the last year? Let’s start by looking at what types of cryptocurrencybased crime increased the most in 2021 by transaction volume.
Year over year percent change in value received by crime type | 2018–2021
Child abuse material

Darknet market

Fraud shop

Cybercriminal administrator

Ransomware

Scam

Stolen funds

600%

400%

200%

-200%
2018

2019

2020

2021

Two categories stand out for their growth: stolen funds and, to a lesser degree, scams.
DeFi is a big part of the story for both.
Let’s start with scams. Scamming revenue rose 82% 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. Please
keep in mind as well that these figures for rug pull losses represent only the value of
investors’ funds that were stolen, and not losses from the DeFi tokens’ subsequent
loss of value following a rug pull.
We should note that roughly 90% of the total value lost to rug pulls in 2021 can be
attributed to one fraudulent centralized exchange, Thodex, whose CEO disappeared
soon after the exchange halted users’ ability to withdraw funds. However, every other
rug pull tracked by Chainalysis in 2021 involved DeFi projects. In nearly all of these
cases, developers have tricked investors into purchasing tokens associated with a DeFi
project before draining the tools provided by those investors, sending the token’s value
to zero in the process.
We believe rug pulls are common in DeFi for two related reasons. One is the hype around
the space. DeFi transaction volume has grown 912% in 2021, and the incredible returns on
INTRODUCTION

THE 2022 CRYPTO CRIME REPORT

decentralized tokens like Shiba Inu have many excited to speculate on DeFi tokens. At the
same time, it’s very easy for those with the right technical skills to create new DeFi tokens
and get them listed on exchanges, even without a code audit. A code audit is a process
by which a third-party firm or listing exchange analyzes the code of the smart contract
behind a new token or other DeFi project, and publicly confirms that the contract’s governance rules are iron clad and contain no mechanisms that would allow for the developers
to make off with investors’ funds. Many investors could likely have avoided losing funds
to rug pulls if they’d stuck to DeFi projects that have undergone a code audit – or if DEXes
required code audits before listing tokens.
Cryptocurrency theft grew even more, with roughly $3.2 billion worth of cryptocurrency
stolen in 2021 — a 516% increase compared to 2020. Roughly $2.2 billion of those funds —
72% of the 2021 total — were stolen from DeFi protocols. The increase in DeFi-related thefts
represents the acceleration of a trend we identified in last year’s Crypto Crime report.
Annual total cryptocurrency stolen by victim type | JAN ‘19–DEC ‘21
2019

2020

2021

$2.5B

$2B

$1.5B

$1B

$500M

$0
Centralized exchange

DeFi protocol

Other

In 2020, just under $162 million worth of cryptocurrency was stolen from DeFi platforms,
which was 31% of the year’s total amount stolen. That alone represented a 335% increase
over the total stolen from DeFi platforms in 2019. In 2021, that figure rose another 1,330%.
In other words, as DeFi has continued to grow, so too has its issue with stolen funds. As
we’ll explore in more detail later in the report, most instances of theft from DeFi protocols
can be traced back to errors in the smart contract code governing those protocols, which
hackers exploit to steal funds, similar to the errors that allow rug pulls to occur.

INTRODUCTION

THE 2022 CRYPTO CRIME REPORT

We’ve also seen significant growth in the usage of DeFi protocols for laundering illicit
funds, a practice we saw scattered examples of in 2020 and that became more prevalent
in 2021. Check out the graph below, which looks at the growth in illicit funds received by
different types of services in 2021 compared to 2020.
Year over year percentage growth in value received by service from illicit addresses
2020–2021

DeFi
Mining
Other
High Risk Exchange
Mixing
High-risk jurisdictions
Other Exchanges
Unnamed Service
Illicit
P2P Exchange
Gambling platform
-500%

500%

1000%

1500%

2000%

DeFi protocols saw the most growth by far in usage for money laundering at 1,964%.
DeFi is one of the most exciting areas of the wider cryptocurrency ecosystem, presenting
huge opportunities to entrepreneurs and cryptocurrency users alike. But DeFi is unlikely to
realize its full potential if the same decentralization that makes it so dynamic also allows
for widespread scamming and theft. One way to combat this is better communication —
both the private and public sectors have an important role to play in helping investors
learn how to avoid dubious projects. In the longer term, the industry may also need to
take more drastic steps to prevent tokens associated with potentially fraudulent or
unsafe projects from being listed on major exchanges.

Illicit cryptocurrency balances are growing.
What can law enforcement do?
One promising development in the fight against cryptocurrency-related crime is the
growing ability of law enforcement to seize illicitly obtained cryptocurrency. In November

INTRODUCTION

THE 2022 CRYPTO CRIME REPORT

2021, for instance, the IRS Criminal Investigations announced that it had seized over $3.5
billion worth of cryptocurrency in 2021 — all from non-tax investigations — representing
93% of all funds seized by the division during that time period. We’ve also seen several
examples of successful seizures by other agencies, including $56 million seized by the
Department of Justice in a cryptocurrency scam investigation, $2.3 million seized from
the ransomware group behind the Colonial Pipeline attack, and an undisclosed amount
seized by Israel’s National Bureau for Counter Terror Financing in a case related to
terrorism financing.
This raises an interesting question: How much cryptocurrency are criminals currently
holding? It’s impossible to know for sure, but we can estimate based on the current
holdings of addresses Chainalysis has identified as associated with illicit activity. As
of early 2022, illicit addresses hold at least $10 billion worth of cryptocurrency, with the
vast majority of this held by wallets associated with cryptocurrency theft. Addresses
associated with darknet markets and with scams also contribute significantly to this
figure. As we’ll explore later in this report, much of this value comes not from the initial
amount derived from criminal activity, but from subsequent price increases of the
crypto assets held.
We believe it’s important for law enforcement agencies to understand these estimates
as they build out their blockchain-based investigative capabilities, and especially as they
develop their ability to seize illicit cryptocurrency.

Let’s make cryptocurrency safer
DeFi-related crime and criminal cryptocurrency balances are just one area of focus for
this report. We’ll also look at the latest data and trends on other forms of cryptocurrencybased crime, including:
•
•
•
•

The ongoing threat of ransomware
Cryptocurrency-based money laundering
Nation state actors’ role in cryptocurrency-based crime
Illicit activity in NFTs
And much more!

As cryptocurrency continues to grow, it’s imperative that the public and private sectors
work together to ensure that users can transact safely, and that criminals can’t abuse
these new assets. We hope that this report can contribute to that goal, and equip law
enforcement, regulators, and compliance professionals with the knowledge to more
effectively prevent, mitigate, and investigate cryptocurrency-based crime.

INTRODUCTION

THE 2022 CRYPTO CRIME REPORT

Money Laundering

THE 2022 CRYPTO CRIME REPORT

DeFi Takes on Bigger Role in Money Laundering But
Small Group of Centralized Services Still Dominate
Cybercriminals dealing in cryptocurrency share one common goal: Move their ill-gotten
funds to a service where they can be kept safe from the authorities and eventually
converted to cash. That’s why money laundering underpins all other forms of cryptocurrency-based crime. If there’s no way to access the funds, there’s no incentive to commit
crimes involving cryptocurrency in the first place.
Money laundering activity in cryptocurrency is also heavily concentrated. While billions of
dollars’ worth of cryptocurrency moves from illicit addresses every year, most of it ends up
at a surprisingly small group of services, many of which appear purpose-built for money
laundering based on their transaction histories. Law enforcement can strike a huge blow
against cryptocurrency-based crime and significantly hamper criminals’ ability to access
their digital assets by disrupting these services. We saw an example of this last year,
when the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned
two of the worst-offending money laundering services — Suex and Chatex — for accepting
funds from ransomware operators, scammers, and other cybercriminals. But as we’ll
explore below, many other money laundering services remain active.

2021 cryptocurrency money laundering activity summarized
Overall, going by the amount of cryptocurrency sent from illicit addresses to addresses
hosted by services, cybercriminals laundered $8.6 billion worth of cryptocurrency in 2021.
Total cryptocurrency value laundered by year | 2017–2021
$13B

$10.9B

$10B

$8.6B

$8B
$6.6B
$5B
$4.3B
$3B

$3B

$0B
2017

MONEY LAUNDERING

2018

2019

2020

2021

THE 2022 CRYPTO CRIME REPORT

That represents a 30% increase in money laundering activity over 2020, though such an
increase is unsurprising given the significant growth of both legitimate and illicit
cryptocurrency activity in 2021. We also need to note that these numbers only account for
funds derived from “cryptocurrency-native” crime, meaning cybercriminal activity such as
darknet market sales or ransomware attacks in which profits are virtually always derived
in cryptocurrency rather than fiat currency. It’s more difficult to measure how much fiat
currency derived from offline crime — traditional drug trafficking, for example — is
converted into cryptocurrency to be laundered. However, we know anecdotally this is
happening, and later in this section provide a case study showing an example of it.
Overall, cybercriminals have laundered over $33 billion worth of cryptocurrency since
2017, with most of the total over time moving to centralized exchanges. For comparison,
the UN Office of Drugs and Crime estimates that between $800 billion and $2 trillion
of fiat currency is laundered each year — as much as 5% of global GDP. For comparison,
money laundering accounted for just 0.05% of all cryptocurrency transaction volume
in 2021. We cite those numbers not to try and minimize cryptocurrency’s crime-related
issues, but rather to point out that money laundering is a plague on virtually all forms of
economic value transfer, and to help law enforcement and compliance professionals be
aware of just how much money laundering activity could theoretically move to cryptocurrency as adoption of the technology increases.
The biggest difference between fiat and cryptocurrency-based money laundering is that,
due to the inherent transparency of blockchains, we can more easily trace how criminals
move cryptocurrency between wallets and services in their efforts to convert their funds
into cash. What kinds of cryptocurrency services do criminals rely on for this?
Destination of funds leaving illicit addresses | 2016–2021
Gambling platform
High-risk exchange

Mining

Other

Mixing

Illicit

Other
DeFi

Unnamed service
Centralized exchange

100%

75%

50%

25%

0%
2016

2017

2018

2019

2020

2021

For the first time since 2018, centralized exchanges didn’t receive the majority of funds
sent by illicit addresses last year, instead taking in just 47%. Where did cybercriminals
MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

send funds instead? DeFi protocols make up much of the difference. DeFi protocols
received 17% of all funds sent from illicit wallets in 2021, up from 2% the previous year.
Year over year percentage growth in value received from illicit addresses by
service category | 2020–2021
DeFi
Mining
High-risk exchange
Mixing
Centralized exchange
Unnamed services
Illicit
P2P exchange
Gambling platform
-500%

500%

1000%

1500%

2000%

That translates to a 1,964% year-over-year increase in total value received by DeFi
protocols from illicit addresses, reaching a total of $900 million in 2021. Mining pools,
high-risk exchanges, and mixers also saw substantial increases in value received from
illicit addresses as well.
We also see patterns in which types of services different types of cybercriminals use to
launder cryptocurrency.
Destination of funds leaving illicit addresses by crime type | 2021
Unnamed service
Illicit

P2P exchange

High-risk jurisdictions

Centralized exchange
High-risk exchange

Other

Mixing

Gambling platform

Mining
DeFi

100%

75%

50%

25%

0%
Child abuse
material

Darknet market Fraud shop

MONEY LAUNDERING

Cybercriminal Ransomware
administrator

Sanctions

Scam

Stolen funds

Terrorism
financing

THE 2022 CRYPTO CRIME REPORT

One thing that stands out is the difference in laundering strategies between the two
highest-grossing forms of cryptocurrency-based crime in 2021: Theft and scamming.
Addresses associated with theft sent just under half of their stolen funds to DeFi
platforms — over $750 million worth of cryptocurrency in total. North Korea-affiliated
hackers in particular, who were responsible for $400 million worth of cryptocurrency
hacks last year, used DeFi protocols for money laundering quite a bit. This may be related
to the fact that more cryptocurrency was stolen from DeFi protocols than any other type
of platform last year. We also see a substantial amount of mixer usage in the laundering
of stolen funds.
Scammers, on the other hand, send the majority of their funds to addresses at centralized
exchanges. This may reflect scammers’ relative lack of sophistication. Hacking cryptocurrency platforms to steal funds takes more technical expertise than carrying out most
scams we observe, so it makes sense that those cybercriminals would employ a more
advanced money laundering strategy.
We also need to reiterate that we can’t track all money laundering activity by measuring
the value sent from known criminal addresses. As stated above, some criminals use
cryptocurrency to launder funds from crimes that happen offline, and there are many
criminal addresses in use that have yet to be identified. However, we can account for
some of these more obscured instances of money laundering by looking for transaction
patterns suggesting that users were trying to avoid compliance screens. For instance,
due to regulations like the Travel Rule, cryptocurrency businesses in many countries must
conduct additional compliance checks, reporting, and information sharing related to
transactions above $1,000 USD in value. As you might expect, illicit addresses send a
disproportionate number of transfers to exchanges just below that $1,000 threshold.
Number of transfers from illicit addresses to exchanges by transfer size | 2021
80,000

60,000

40,000

20,000

9,
]
$1
00
00
0]
,$
[$
10
10
99
99
]
,$
[$
11
11
99
99
]
,$
[$
12
12
9
9]
99
,$
[$
13
13
9
9]
99
,$
[$
14
14
9
9]
99
,$
[$
15
15
99
99
]
,$
[$
16
16
99
99
]
,$
[$
17
17
99
99
]
,$
[$
18
18
9
9]
99
,$
[$
19
19
9
9]
99
,$
[$
20
20
9
9]
99
,$
[$
21
21
99
99
]
,$
[$
22
22
99
99
]
,$
[$
23
23
9
9]
99
,$
[$
24
24
9
9]
99
,$
[$
25
25
9
99
9]
,$
[$
26
26
99
99
]
,$
[$
27
27
99
99
]
,$
[$
28
28
9
9]
99
,$
29
99
]
10

]

79
,$

69
9

$6
99

9,
59

]

Transfer size range

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

Exchanges using Chainalysis would be able to see that these funds are coming from
illicit addresses regardless of transfer size. But more generally, compliance teams should
consider treating users who consistently send or receive transactions of that size with
extra scrutiny. Repeated instances of transactions just below the threshold may indicate
users are doing what’s known as structuring, meaning purposely breaking up large
payments into smaller ones just below reporting thresholds in order to fool compliance
teams.

Money laundering activity remains highly concentrated in 2021,
but less so than in 2020
As we’ve discussed previously, money laundering activity is heavily concentrated to just a
few services. We can see how that concentration has changed over time below.
Share of illicit cryptocurrency moving to top five services and total number of unique
services receiving illicit cryptocurrency | 2011–2021
Number of conversion services

Share going to top 5
100%

1500

75%
1000
50%
500
25%

0
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

With fewer services used in 2021, money laundering concentration initially appears to
have increased slightly. 58% of all funds sent from illicit addresses moved to five services
last year, compared to 54% in 2020.
However, money laundering activity is better viewed at the deposit address level rather
than the service level. The reason for that is that many of the money laundering services
used by cybercriminals are nested services, meaning they operate using addresses
hosted by larger services in order to tap into those larger services’ liquidity and trading
pairs. Over-the-counter (OTC) brokers, for example, often function as nested services
with addresses hosted by large exchanges. In the graph below, we look at all service
deposit addresses that received any illicit funds in 2021, broken down by the range of
illicit funds received.

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

All illicit cryptocurrency received by service deposit addresses
Deposit addresses bucketed by total illicit cryptocurrency received | 2021
Number of deposit addresses

Total illicit value received

3,092,024
$1.5B
143,579
100,000

22,734
$886,470,600
3,324

10,000
1,000

$878,069,800

$1B

540

$625,438,400
$409,507,000

100
10

$500M
42

$160,150,900
$27,387,700

1
$0-$100

$205,644,900

$100-$1K

$1K-$10K

$10K-$100K

$100K-$1M

$1M-$10M

$10M-$100M

Total cryptocurrency value in USD

Number of deposit addresses

$1,404,401,000

466,190

$100M+

Deposit address buckets

How to read this graph: This graph shows service deposit addresses bucketed by how much total illicit
cryptocurrency value each address received individually in 2021. Each blue bar represents the number
of deposit addresses in the bucket, while each orange bar represents the total illicit cryptocurrency
value received by all deposit addresses in the bucket. Using the first bucket as an example, we see that
3,092,024 deposit addresses received between $0 and $100 worth of illicit cryptocurrency, and together
all of those deposit addresses received a total of $27.4 million worth of illicit cryptocurrency.

A group of just 583 deposit addresses received 54% of all funds sent from illicit addresses
in 2021. Each of those 583 addresses received at least $1 million from illicit addresses,
and in total they received just under $2.5 billion worth of cryptocurrency. An even smaller
group of 45 addresses received 24% of all funds sent from illicit addresses for a total
of just under $1.1 billion. One deposit address received just over $200 million, all from
wallets associated with the Finiko Ponzi scheme.
While money laundering activity remains quite concentrated, it’s less so than in 2020.
That year, 55% of all cryptocurrency sent from illicit addresses went to just 270 service
deposit addresses. Law enforcement action could be one possible reason money
laundering activity became less concentrated. As we mentioned above, last year OFAC
sanctioned Suex, a Russia-based OTC broker, that had received tens of millions’ of dollars’
worth of cryptocurrency from addresses associated with ransomware, scams, and other
forms of criminal activity. Soon after, OFAC also sanctioned Chatex, a P2P exchange
founded by the same person as Suex with a similar client profile. While we couldn’t share
their names at the time, addresses associated with both services appeared in the 270 we
identified as the biggest laundering addresses in last year’s report.

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

It’s possible that some money laundering services ceased operations after seeing those
and other actions taken against illicit platforms, forcing cybercriminals to disperse their
money laundering activity to other operators. It’s also possible that money laundering
services have continued to operate but spread their activity across more deposit
addresses, which would contribute to the lessening concentration we see above.
We also see differing levels of concentration in money laundering depending on the asset.
Money laundering concentration: Share of total illicit value received by top deposit
addresses by asset | 2021
Bitcoin

Ethereum

Stablecoins

Altcoins

Percent of all illicit value received

100%

75%

50%

25%

0%
20

100

Number of deposit addresses

Bitcoin’s money laundering activity is the least concentrated by far. The 20 biggest money
laundering deposit addresses receive just 19% of all Bitcoin sent from illicit addresses,
compared to 57% for stablecoins, 63% for Ethereum, and 68% for altcoins.
We also see differences in the level of money laundering concentration for different types
of cybercriminals. The chart below breaks down by crime category all addresses that
received over $1 million in illicit cryptocurrency in 2021, and the share of all funds sent
from those criminal categories that the deposit addresses account for.

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

Number of deposit addresses receiving over $1M in illicit cryptocurrency by crime
category and share of all value sent by crime category | 2021
Number of deposit addresses

Share of total value
60%

583

58%

57%

54%

Number of deposit addresses

47%
400

40%
37%
33%
275

200

20%
164

Percent of all cryptocurrency sent by illicit addresses

600

0%
Total Illicit

Stolen funds

Darknet market

Fraud shop

Ransomware

Scam

What stands out most is how much less concentrated money laundering activity is for
scammers and darknet market vendors and administrators compared to other crime
categories. This may reflect the fact that the criminal activity for those categories is
itself less concentrated. Many more cybercriminals at varying levels of sophistication are
participating in darknet market sales and scamming, so it makes sense we’d see those
cybercriminals’ funds dispersed across more deposit addresses for money laundering —
each player may follow their own strategy. For more sophisticated forms of cybercrime
like ransomware, administrators at the biggest ransomware strains account for a greater
share of all activity, so we’d expect to see their money laundering be more concentrated
as well.

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

In 2021, money laundering activity in
crypto was heavily concentrated.
AMOUNT OF MONEY
LAUNDERED PER
ADDRESS

583
deposit addresses
received over half
of illicit crypto

Large-scale
Over $1M

NUMBER OF DEPOSIT ADDRESSES

54%
$2.5B

170K

deposit
addresses

Professionial
$1K-$1M

42%
$1.9B

3.6M

deposit
addresses

Small-time
$0-$1K

4%
$188M

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

Case study: Spartan Protocol hacker uses DeFi protocols and chain
hopping to launder stolen funds
As we discussed above, usage of DeFi protocols for money laundering skyrocketed in
2021. The Spartan Protocol hack provides a good example of what this activity looks like.
In May 2021, one or more hackers exploited a code vulnerability to steal over $30 million
worth of cryptocurrency from the protocol — mostly its native SPARTA token. The hacker
then converted much of those funds into anyETH and anyBTC, which are Ethereum and
Bitcoin composites respectively built on separate blockchains than the originals. Some
of that anyBTC was then swapped for Bitcoin, thereby moving to the Bitcoin blockchain,
which brings us to the transactions seen on the Chainalysis Reactor graph below.

Using two DeFi protocols that specialize in cross-chain transactions, the hacker chain
hopped to the Ethereum blockchain, converting funds into Ethereum and renBTC. The
hacker then sent those funds to a DEX, swapping them for new Ethereum and wrapped
Ethereum. Finally, the hacker sent those funds to Tornado Cash, a mixer for the Ethereum
blockchain.
While most of these transactions took place in the days immediately following the hack
in early May, several took place months later, with the hacker continuing to launder funds
well into October. This would be less likely to happen with centralized services, which
unlike DeFi protocols typically ask customers for KYC information upon signup and have
more ability as custodial platforms to freeze funds from suspicious sources. The Spartan
Protocol hack is a great example not just of why DeFi holds appeal as a money laundering
MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

mechanism, but also of how complex investigations can become when cybercriminals use
DeFi — especially chain hopping protocols.
Law enforcement must become proficient in analyzing DeFi transactions in order to
crack cases like that of the Spartan Protocol hack, but the teams behind DeFi protocols
must also work to prevent their products from being abused by cybercriminals. One way
they can do that is by screening the wallets interacting with their smart contracts for
prior transactions with known illicit addresses. With the Chainalysis API, DeFi teams
can automate the screening process and ensure that their protocols aren’t being used
to facilitate money laundering. If you work in DeFi, contact us here to learn more about
automated wallet screening.

Case study: UK-based drug traffickers work with broker to launder
drug money with Bitcoin
As we discussed previously, it’s difficult to measure cryptocurrency’s role in money
laundering of funds derived from traditional, offline crimes. That’s because in those cases,
the cryptocurrency isn’t moving from addresses that we’ve previously identified as associated with crime, but rather is initially deposited as fiat currency with no evidence of its
criminal origins visible on the blockchain. The only way someone could know the origins
of those funds would be if they were already investigating the criminals in question, and
we know anecdotally that at least some criminals are doing this. Investigators can still
use Chainalysis Reactor to investigate these cases, and we’ll show you an example of how
they do it in the following case study involving the successful investigation of a UK-based
drug trafficking group.
The scheme was simple: The group supplied drugs across northern England and distributed them to street-level dealers, who would then sell them for cash which was later
delivered back to the crime group. A courier would then collect the cash and deliver it to
a broker who would arrange for the funds to be converted into bitcoin. The broker would
then send the bitcoin to an address specified by the crime group, taking a small 4% fee.
The Bitcoin network is essentially used as a value transfer system, and further analysis
showed that the funds were ultimately sent to an OTC service nested at a popular cryptocurrency exchange.
Greater Manchester Police’s Serious and Organised Crime Group discovered Bitcoin’s
role in the money laundering operation after pulling over one of the couriers, whom
they’d previously observed collecting cash from a safe house, finding £170,000 in cash
concealed in his vehicle. Police arrested the suspect for money laundering and seized
two mobile phones. A subsequent digital forensic examination of these devices showed

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

various WhatsApp and Telegram messages
detailing the plan, complete with Bitcoin
addresses and screenshots of transaction
hashes.
With this information, the officers were able
to utilize blockchain analysis to see the flow of
funds. Using Chainalysis Reactor, we can see the
activity discussed in the message screenshot.
An equivalent of £174,900 minus a 4% brokers
fee was sent in bitcoin to the address specified
by the traffickers. This represents a relatively low
fee in comparison to more traditional money
laundering typologies, suggesting that Bitcoinbased laundering could become increasingly
attractive to traditional criminals. The funds are
then sent to an intermediary wallet before being
deposited to an OTC service nested at a popular
cryptocurrency exchange. Analysis of other transactions yielded evidence that the courier
working for the drug trafficking group laundered at least £1 million across several Bitcoin
transactions using these methods.

The case shows how important it is for all criminal investigators — not just those tasked
with cybercrime cases — to understand cryptocurrency and blockchain analysis. It also
serves as an example of how blockchain analysis can supplement more established investigative techniques law enforcement is already well-versed in. In this case, officers used
digital forensic analysis to discover a cryptocurrency nexus, and from there were able to
analyze transactions on the blockchain to gain an understanding of the drug traffickers’
money laundering scheme, leading to successful prosecutions.

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

Criminal Balances

THE 2022 CRYPTO CRIME REPORT

Criminal Whales Hold over $25 Billion in
Cryptocurrency From Multitude of Illicit Sources
One positive development in the last year has been law enforcement’s growing ability to
seize cryptocurrency from criminals. We saw several examples of this in 2021, including:
• The U.S. Department of Justice (DOJ) seizing $2.3 million worth of cryptocurrency
from the DarkSide ransomware operators responsible for the attack on Colonial
Pipeline, as we cover in-depth in our ransomware section.
• IRS-CI’s cumulative seizures of over $3.5 billion worth of cryptocurrency over the
course of 2021.
• London’s Metropolitan Police Service (MPS) made the UK’s largest ever seizure of
cryptocurrency, taking £180 million worth from a suspected money launderer.
More recently in February 2022, the DOJ seized $3.6 billion worth of Bitcoin connected to
the 2016 hack of Bitfinex, in what is currently the largest ever recovery of stolen assets in
either cryptocurrency or fiat.
These stories are important not only because they allow financial restitution for victims
of cryptocurrency-based crime, but also because they disprove the narrative that cryptocurrency is an untraceable, unseizable asset perfect for crime. If cybercriminals know law
enforcement is capable of seizing their cryptocurrency, it may lower their incentive to use
it in the future.
These cases also raise an important question: How much cryptocurrency is currently held
by known criminal entities on the blockchain, and could therefore theoretically be seized
by law enforcement? The answer is a function not just of cryptocurrency-based crime
revenue in 2021, but of the all-time criminal revenue still held by visible addresses. Below,
we’ll break down both the sum amount of cryptocurrency holdings that can be traced
back to illicit sources, as well as the total balances of criminal whales, meaning criminals
holding $1 million or more in cryptocurrency.

Stolen funds dominate total criminal balances
Let’s start by looking at the year-end criminal balances over the last five years, broken
down by the types of illicit activity the funds were derived from. In this analysis, criminal
balances refer to any funds currently held by addresses Chainalysis has attributed to illicit
actors. These addresses can belong to criminal services, like darknet markets, but in some
cases can also be hosted by private wallets, such as in cases involving stolen funds.
MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

Year end criminal balances | 2017–2021
Stolen funds

Scam

Sanctions
Fraud shop

Ransomware

Cybercriminal administrator

Darknet market

$13B

$10B

$8B

$5B

$3B

$0B
12/31/2017

12/31/2018

12/31/2019

12/31/2020

12/31/2021

Two things stand out most: The first is the huge increase in criminal balances in 2021 — at
year’s end, criminals held $11 billion worth of funds with known illicit sources, compared
to just $3 billion at the end of 2020. The second is how much stolen funds dominate. As
of the end of 2021, stolen funds account for 93% of all criminal balances at $9.8 billion.
Darknet market funds are next at $448 million, followed by scams at $192 million, fraud
shops at $66 million, and ransomware at $30 million.
Total weekly criminal balances by crime type | 2021
Stolen funds

Scam

Sanctions
Fraud shop

Ransomware

Cybercriminal administrator

Darknet market

$20B
$15B
$10B
$5B
$0B
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
21
22
21
22
02 202 202
02 202 2021 202 202
02 202
02 202
02
02
02
02
20
20
20
20
/2
/2
/2
/
/2
/2
/
/
/2 /2/2
5/
5/ /15/ 3/8/
5/ 2/6/ /27/ /17/ 2/7/
/4
19
23
13
10
31
21
29
12
2
2
1
/
8
/
/
/
/
/
/
/
/
/
0
/
1
2
3
4
5
5
6
7
8
9
1
1
1
10
11
12

1/4

Note: “Cybercriminal administrator” refers to addresses that have been attributed to individuals connected to a cybercriminal organization, such as a darknet market.

Criminal balances also fluctuated throughout the year, from a low of $6.6 billion in July
to a high of $14.8 billion in October. The fluctuations are a reminder of the importance

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

of speed in cryptocurrency investigations, as criminal funds that have been successfully
traced on the blockchain can be liquidated quickly. Of course, criminal balances can
also fall for good reasons as well. The large drop in criminal balances we see above in
February 2022 is due to the DOJ’s $3.6 billion seizure of Bitcoin stolen in the 2016 Bitfinex
hack. Following that seizure, criminal balances currently stand at roughly $5 billion as of
February 9, 2022.
Let’s look at which types of cybercriminals tend to hold their funds the longest.
Average cryptocurrency holding time for criminal addresses | 2021 VS ALL-TIME
2021

All-time

1,500

Number of days

1,252
1,142

1,000

500

519
253

468

437
192

169

112

0
Darknet market

Fraud shop

Scam

Stolen funds

Ransomware

Looking at all-time trends, darknet market vendors and administrators tend to hold their
funds the longest before liquidating, while wallets with stolen funds tend to hold for the
shortest amount of time. That last bit may be surprising — how could stolen funds be
held for such little time but account for the vast majority of criminal balances? It turns
out that most of those holdings belong to extremely large wallets that hold longer than
is typical for others in the stolen funds category. But what really stands out is how much
holding times have decreased across the board, as the 2021 average holding times are
at least 75% shorter than the all-time figures in all categories. Ransomware operators in
particular exemplify this trend, as they now hold funds on average for just 65 days before
liquidating. This may be a response to the mounting law enforcement pressure ransomware attackers face.

Criminal whales show more variation
A question that naturally follows from our investigation into criminal balances: Which
criminals hold the most cryptocurrency? We decided to investigate by analyzing the

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

balances of criminal whales. However, please note that we calculate criminal whale
balances a bit differently than we do the overall criminal balances we discussed above.
We define a criminal whale as any private wallet holding $1 million or more worth of
cryptocurrency that has received more than 10% of its funds from illicit addresses.
Please recognize that because criminal whale balances are calculated based on private
wallet holdings, while overall criminal balances are calculated based on the holdings of
addresses tagged as illicit (meaning they can include funds held at services in addition to
private wallets), the criminal whale balances discussed here won’t align with the overall
criminal balances calculated above.
Overall, Chainalysis has identified 4,068 criminal whales holding over $25 billion worth
of cryptocurrency. Criminal whales represent 3.7% of all cryptocurrency whales — that is,
private wallets holding over $1 million worth of cryptocurrency.
Share of all cryptocurrency whales that received 10% or more of funds
from illicit addresses
Criminal whales
3.7%

Non-criminal whales
96.3%

An interesting pattern emerges when we break down all criminal whales by the share of
their total funds that have illicit origins: Most criminal whales received either a relatively
small or extremely large share of their total balance from illicit addresses.

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

Criminal whales by share of all funds received from illicit addresses
1500
1374

1361

1000
846

500

296
191
0
10% – 25%

25% – 50%

50% – 75%

75% – 90%

90% – 100%

Share of all funds received from illicit addresses

Above, we bucket all criminal whales by the share of their total cryptocurrency received
that came from illicit addresses. The lowest-share bucket is the biggest — 1,374 criminal
whales received between 10% and 25% of their total balance from illicit addresses.
However, the largest-share bucket is close behind, with 1,361 criminal whales that
received between 90% and 100% of their total balance from illicit addresses. In total,
1,333 criminal whales received between 25% and 90% of all funds from illicit addresses.
Illicit funds received by criminal whales also come from more varied sources than the
funds making up overall criminal balances.
Source of illicit funds received by criminal whales
Ransomware
1.9%
Fraud shop
3.5%

Stolen funds
24.3%

Darknet market
37.7%

Scam
32.4%

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

Whereas stolen funds dominate overall criminal balances, darknet markets are the
biggest source of illicit funds sent to criminal whales, followed by scams second and
stolen funds third.
Finally, we can also use time zone analysis to try and approximate the location of
criminal whales. On the graph below, we’ve assigned UTC time zones to the 768 criminal
whales whose wallets have enough activity for us to make a strong estimate.
Estimated UTC time zone of criminal whales
Number of whales

Total value held by whales
$1,000,000,000

$750,000,000

$500,000,000

$250,000,000

Criminal whale balances (USD)

Number of criminal whales

100

$0
-12 -11 -10 -9

-8

-7

-6

-5

-4

-3

-2

-1

UTC time zone

UTC time zones 2, 3, and 4 are estimated to contain the most criminal whales, while
time zones 1 and -9 also have a large number. UTC time zones 2, 3, and 4 include much
of Russia, including major population centers like Moscow and Saint Petersburg, which
is especially interesting in the context of Russia’s outsized role in cryptocurrency-based
crime, as we explore elsewhere in this report. However, time zones of course only allow
us to estimate longitudinal location, so it’s possible some of these criminal whales are
based in other countries within time zones 2, 3, and 4, such as South Africa, Saudi Arabia,
or Iran.
The ability to efficiently track criminal whales and quantify their holdings from one
public data set is a major difference between cryptocurrency-based crime and fiat-based
crime. In fiat, the highest net worth criminals have murky networks of foreign banks
and shell corporations to obfuscate their holdings. But in cryptocurrency, transactions
are saved on the blockchain for all to see. Investigation of criminal whales represents a
significant opportunity for government agencies around the world to continue their string
of successful seizures, and bring to justice the biggest beneficiaries of cryptocurrencybased crime.

MONEY LAUNDERING

THE 2022 CRYPTO CRIME REPORT

NFTs and Crime

THE 2022 CRYPTO CRIME REPORT

Chainalysis Detects Significant Wash Trading and
Some Money Laundering In this Emerging Asset Class
Non-fungible tokens (NFTs) were one of the biggest stories in cryptocurrency in 2021.
NFTs are blockchain-based digital items whose units are designed to be unique, unlike
traditional cryptocurrencies whose units are meant to be interchangeable. NFTs can
store data on blockchains — with most NFT projects built on blockchains like Ethereum
and Solana — and that data can be associated with images, videos, audio, physical
objects, memberships, and countless other developing use cases. NFTs typically give the
holder ownership over the data or media the token is associated with, and are commonly
bought and sold on specialized marketplaces.
NFT popularity skyrocketed in 2021. Chainalysis tracked a minimum $44.2 billion worth
of cryptocurrency sent to ERC-721 and ERC-1155 contracts — the two types of Ethereum
smart contracts associated with NFT marketplaces and collections — up from just $106
million in 2020.
Weekly total cryptocurrency value and average value per transaction sent to
NFT platforms | 2021
Total value sent

Average value per transaction
2,500
2,000

3,000,000,000

1,500
2,000,000,000
1,000
1,000,000,000

500

Average value (USD)

Total value (USD)

4,000,000,000

0
3/1/2021

5/1/2021

7/1/2021

9/1/2021 11/1/2021

Date

However, as is the case with any new technology, NFTs offer potential for abuse. It’s
important that as our industry considers all the ways this new asset class can change
how we link the blockchain to the physical world, we also build products that make NFT

NFTS AND CRIME

THE 2022 CRYPTO CRIME REPORT

investment as safe and secure as possible. Below, we look at two forms of illicit activity
we’ve observed in NFTs:
• Wash trading to artificially increase the value of NFTs
• Money laundering through the purchase of NFTs
Let’s dive in.

Some NFT sellers are making a killing with wash trading
Wash trading, meaning executing a transaction in which the seller is on both sides of the
trade in order to paint a misleading picture of an asset’s value and liquidity, is another
area of concern for NFTs. Wash trading has historically been a concern with cryptocurrency exchanges attempting to make their trading volumes appear greater than they
are. In the case of NFT wash trading, the goal would be to make one’s NFT appear more
valuable than it really is by “selling it” to a new wallet the original owner also controls.
In theory, this would be relatively easy with NFTs, as many NFT trading platforms allow
users to trade by simply connecting their wallet to the platform, with no need to identify
themselves.
With blockchain analysis, however, we can track NFT wash trading by analyzing sales
of NFTs to addresses that were self-financed, meaning they were funded either by the
selling address or by the address that initially funded the selling address. Analysis of NFT
sales to self-financed addresses shows that some NFT sellers have conducted hundreds of
wash trades.
NFT sellers by number of sales to self-financed addresses | 2021
1,000

830
750

500
475
452
360
322

319

250

254
207

203

197

188

184

158

157

137

130

127

126

125

120

119

0
1

NFT seller

NFTS AND CRIME

THE 2022 CRYPTO CRIME REPORT

Let’s look more closely at Seller 1, the most prolific NFT wash trader on the chart above,
who has made 830 sales to addresses they’ve self-financed. The Etherscan screenshot
below shows a transaction in which that seller, using the address beginning 0x828, sold
an NFT to the address beginning 0x084 for 0.4 Ethereum via an NFT marketplace.

Everything looks normal at first glance. However, the Chainalysis Reactor graph below
shows that address 0x828 sent 0.45 Ethereum to that address 0x084 shortly before
that sale.

NFTS AND CRIME

THE 2022 CRYPTO CRIME REPORT

This activity fits a pattern for Seller 1. The Reactor graph below shows similar relationships between Seller 1 and hundreds of other addresses to which they’ve sold NFTs.

Seller 1 is the address in the middle. All other addresses on this graph received funds
from Seller 1’s main address prior to buying an NFT from that address. So far though,
Seller 1 doesn’t seem to have profited from their prolific wash trading. If we calculate
the amount Seller 1 has made from NFT sales to addresses they themselves did not
fund — whom we can assume are victims unaware that the NFTs they’re buying have
been wash traded — it doesn’t make up for the amount they’ve had to spend on gas
fees during wash trading transactions.

NFTS AND CRIME

THE 2022 CRYPTO CRIME REPORT

Seller 1 address

Amount spent on gas
fees in wash trading
transactions

Revenue from sales of
wash traded NFTs to
victims

Profits

0x828…

– $35,642

$27,258

– $8,383

However, the story changes if we look at a bigger piece of the NFT ecosystem. Using
blockchain analysis, we identified 262 users who have sold an NFT to a self-financed
address more than 25 times. While we can’t be 100% sure that all instances of NFT sales
to self-financed wallets are intended for wash trading, the 25-transaction threshold gives
us a higher degree of confidence that these users are habitual wash traders. Just as we
did above for one wash trader, we calculated these 262 wash traders’ overall profits by
subtracting the amount they’ve spent on gas fees from the amount they’ve made selling
NFTs to unsuspecting buyers. One caveat for this analysis is that it only captures trades
made in Ethereum and Wrapped Ethereum, so there’s likely wash trading activity we’re
not considering here.
Nonetheless, an interesting story emerges: Most NFT wash traders have been unprofitable, but the successful NFT wash traders have profited so much that, as a whole, this
group of 262 has profited immensely overall.

Wash trader group

Number of addresses

Profits from wash trading

Profitable wash traders

110

$8,875,315

Unprofitable wash traders

152

– $416,984

All

262

$8,458,331

The 110 profitable wash traders have collectively made nearly $8.9 million in profit from
this activity, dwarfing the $416,984 in losses made by the 152 unprofitable wash traders.
Even worse, that $8.9 million is most likely derived from sales to unsuspecting buyers
who believe the NFT they’re purchasing has been growing in value, sold from one distinct
collector to another.
NFT wash trading exists in a murky legal area. While wash trading is prohibited in
conventional securities and futures, wash trading involving NFTs has yet to be the subject
of an enforcement action. However, that could change as regulators shift focus and apply
existing anti-fraud authorities to new NFT markets. More generally, wash trading in NFTs
can create an unfair marketplace for those who purchase artificially inflated tokens, and
NFTS AND CRIME

THE 2022 CRYPTO CRIME REPORT

its existence can undermine trust in the NFT ecosystem, inhibiting future growth. We
encourage NFT marketplaces to discourage this activity as much as possible. Blockchain
data and analysis makes it easy to spot users who sell NFTs to addresses they’ve
self-financed, so marketplaces may want to consider bans or other penalties for the
worst offenders.

Money laundering activity small but visible in NFTs
Money laundering has long been an issue in the fine art world, and it’s not hard to
see why. As one 2019 article from the National Law Review points out, art pieces like
paintings are easy to move, have relatively subjective prices, and may offer certain tax
advantages. Criminals can therefore purchase art with illegally gained funds, sell them
later, and poof — they have seemingly clean money with no connection to the original
criminal activity. This background, along with the pseudonymity of cryptocurrency, has
many wondering if NFTs are vulnerable to similar abuses. But while money laundering in
physical art is difficult to quantify, we can make more reliable estimates of NFT-based
money laundering thanks to the inherent transparency of the blockchain.
So, are cybercriminals using illicit funds to purchase NFTs? Let’s take a look.
Illicit value received by NFT platforms | 2020Q2–2021Q4
Stolen funds

Scam

Sanctions

2020Q3

2020Q4

Cybercriminal administrator

Darknet market

$1,500,000

$1,000,000

$500,000

$0
2020Q2

2021Q1

2021Q2

2021Q3

2021Q4

Value sent to NFT marketplaces by illicit addresses jumped significantly in the third
quarter of 2021, crossing $1 million worth of cryptocurrency. The figure grew again in the
fourth quarter, topping out at just under $1.4 million. In both quarters, the vast majority
of this activity came from scam-associated addresses sending funds to NFT marketplaces
to make purchases. Both quarters also saw significant amounts of stolen funds sent to

NFTS AND CRIME

THE 2022 CRYPTO CRIME REPORT

marketplaces as well. Perhaps most concerningly, in the fourth quarter, we saw roughly
$284,000 worth of cryptocurrency sent to NFT marketplaces from addresses with
sanctions risk. All of that was due to transfers from the P2P exchange Chatex, which the
U.S. Treasury’s Office of Foreign Asset Control (OFAC) added to its Specially Designated
Nationals (SDN) list last year.
We can see examples of different types of criminals buying NFTs in the Reactor graph below.

Here, we can see addresses associated with several different types of cybercriminals
sending funds to a popular NFT marketplace, including malware operators, scammers,
and Chatex.
All of this activity represents a drop in the bucket compared to the $8.6 billion worth of
cryptocurrency-based money laundering we tracked in all of 2021. Nevertheless, money
laundering, and in particular transfers from sanctioned cryptocurrency businesses,
represents a large risk to building trust in NFTs, and should be monitored more closely by
marketplaces, regulators, and law enforcement.

NFTS AND CRIME

THE 2022 CRYPTO CRIME REPORT

Ransomware

THE 2022 CRYPTO CRIME REPORT

As Ransomware Payments Continue to Grow, So
Too Does Ransomware’s Role in Geopolitical Conflict
In our last Crypto Crime Report, we deemed 2020 the “Year of Ransomware” due to the
huge growth in cryptocurrency extorted in ransomware attacks. When we first released
that report last year, we announced that we had tracked roughly $350 million worth of
payments from victims to ransomware operators. However, we explained at the time
that this figure was likely an underestimate we would raise in the future due to both
underreporting by ransomware victims and our continuing identification of ransomware
addresses that have received previous victim payments.
Sure enough, we updated our ransomware numbers a few times throughout 2021,
reflecting new payments we hadn’t identified previously. As of January 2022, we’ve now
identified just over $692 million in 2020 ransomware payments — nearly double the
amount we initially identified at the time of writing last year’s report.
Total cryptocurrency value received by ransomware addresses | 2016–2021
$800

Cryptocurrency value in millions of USD

$692

$602

$600

$400

$200
$150

$152

$39

$24
$0
2016

2017

2018

2019

2020

2021

You’ll also see above that as of now, we’ve identified just over $602 million worth of
ransomware payments in 2021. However, just like last year, we know that this too is an
underestimate, and that the true total for 2021 is likely to be much higher. In fact, despite
these numbers, anecdotal evidence, plus the fact that ransomware revenue in the first
half of 2021 exceeded that of the first half of 2020, suggests to us that 2021 will eventually be revealed to have been an even bigger year for ransomware. Below, we’ll look

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

more at which ransomware strains were most prolific in 2021, how ransomware operators
laundered their funds, and examples of how law enforcement and security agencies are
fighting back against ransomware.

2021 ransomware activity summarized
Conti was the biggest ransomware strain by revenue in 2021, extorting at least $180
million from victims.
Top 10 ransomware strains by revenue | 2021
$200,000,000

$150,000,000

$100,000,000

$50,000,000

r
te
at
kM
ac

t
Bi

ck
Lo

l/
RE

no
So

to
yp
Cr
x
ni
Ph

er
ck
lo

Si
rk
Da

Believed to be based in Russia, Conti operates using the ransomware-as-a-service (RaaS)
model, meaning Conti’s operators allow affiliates to launch attacks using its ransomware
program in exchange for a fee.
DarkSide is also notable, both for ranking second in 2021 in funds extorted from victims
that we’ve been able to identify, and also for its role in the attack on oil pipeline Colonial
Pipeline, one of the year’s most notable ransomware attacks. The attack caused fuel
shortages in some areas, which were exacerbated by subsequent panic buying as word
of the attack’s impact spread. The Colonial story serves as an important reminder of one
reason ransomware attacks are so dangerous: They frequently target critical infrastructure we need to keep the country running — not just energy providers, but food providers,
schools, hospitals and financial services companies as well.
However, the Colonial Pipeline attack also turned into a success story, as the U.S.
Department of Justice was able to track and seize $2.3 million of the ransom that
Colonial paid to DarkSide. We’ll look more at how agents were able to do this later in the

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

section, but suffice it to say that law enforcement’s growing ability to seize payments
after they’re made represents a huge step forward in the fight against ransomware. It
also serves as one more reason why more victims should report attacks — even if you pay,
law enforcement may be able to help you get those funds back. Overall, 2021 also saw
more active individual ransomware strains than any other year.
Active ransomware strains by year | 2011–2021
150

100

0
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

At least 140 ransomware strains received payments from victims at any point in 2021,
compared to 119 in 2020, and 79 in 2019. Those numbers are emblematic of the intense
growth of ransomware we’ve seen over the last two years. Most ransomware strains come
and go in waves, staying active for a short amount of time before becoming dormant. We
show this on the graph below, which shows how the top ten ransomware strains ebbed
and flowed in activity throughout the year.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

Top 10 most active strains in 2021 by monthly revenue | JAN–NOV 2021
Ryuk

REvil/Sodinokibi
Darkside

100%

Cuba

Phoenix Cryptolocker
Conti

Clop

LockBit

Hive

BlackMatter

G
E

75%

B
A
50%

25%

0%
Jan 2021

D
Mar 2021

May 2021

Jul 2021

Sep 2021

Nov 2021

DarkSide momentum falters after May Colonial Pipeline attack

Evil Corp-spinoff Phoenix Cryptolocker disappears after a record-breaking haul

Ryuk wanes in second half of year, perhaps shifting operations to Diavol

Clop remerges in the fall after several arrests throughout the year likely reduce activity

REvil sparked retirement rumors after Kaseya attack in July. It ultimately self-closed in Q4 under LE pressure

BlackMatter picks up where DarkSide left off, but a decryptor released by Emsisoft likely depressed revenue

LockBit went dark while it rebranded to LockBit 2.0 in June and remains a persistent threat into 2022

Conti was the one strain that remained consistently active for all of 2021, and in fact saw
its share of all ransomware revenue grow throughout the year. Overall though, Conti’s
staying power is increasingly outside the norm.
As we’ll explore more later on, the growing number of active strains and generally short
lifespan of most strains is also a result of rebranding efforts. More and more in 2021,
we’ve seen the operators of strains publicly “shut down” before re-launching under a new
name, presenting themselves as a separate cybercriminal group. Often, the rebranded
strain’s financial footprint on the blockchain aligns with that of the original, which can
tip investigators off as to who’s really behind the new strain.
Ransomware payment sizes also continued to grow in 2021, a trend we’ve observed every
year since 2018.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

Average ransomware payment size | 2016–2021
$125,000
$100,000
$75,000
$50,000
$25,000
$0
2016

2017

2018

2019

2020

2021

The average ransomware payment size was over $118,000 in 2021, up from $88,000 in
2020 and $25,000 in 2019. Large payments such as the record $40 million received by
Phoenix Cryptolocker spurred this all-time high in average payment size. One reason for
the increase in ransom sizes is ransomware attackers’ focus on carrying out highly-targeted attacks against large organizations. This “big game hunting” strategy is enabled in
part by ransomware attackers’ usage of tools provided by third-party providers to make
their attacks more effective. These tools range from illicit hacking aids to legitimate
products, and include:
• Rented infrastructure such as bulletproof web hosting, domain registration
services, botnets, proxy services, and email services to carry out attacks.
• Hacking tools like network access to already-infiltrated networks, exploit kits that
scan victims’ networks for vulnerabilities, and malware programs that help
attackers distribute ransomware more effectively.
• Stolen data such as passwords, individuals’ personally identifiable information,
and compromised remote desktop protocol (RDP) credentials, which help attackers
break into victims’ computer networks.
Usage of these services by ransomware operators spiked to its highest ever levels in 2021.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

Share of ransomware funds going to third-party sellers | 2016–2021
20%
16%
15%

10%

6%
5%
1%

2016

2017

2018

2019

0%
2020

2021

16% of all funds sent by ransomware operators were spent on tools and services used to
enable more effective attacks, compared to 6% in 2020. While it’s possible some of that
activity constitutes money laundering rather than the purchase of illicit services, we
believe that increasing use of those services is one reason ransomware attackers became
more effective in 2021, as evidenced by rising average victim payment sizes.
Another important trend to monitor in ransomware is money laundering. The graph below
shows where attackers move the cryptocurrency they extort from victims.
Destination of funds leaving ransomware addresses | 2016–2021
Mixing

P2P exchange

Centralized exchange

Other

Mining

Illicit

High-risk exchange

Gambling platform

100%

75%

50%

25%

21
20

4
Q
20

2
20

Q
20

20
20

Q
19
20

2
19
20

Q
19
20

18
20

17
20

Q
17
20

Q
16

RANSOMWARE

16
20

Q
16

16
20

THE 2022 CRYPTO CRIME REPORT

Over the last few years, most ransomware strains have laundered their stolen funds by
sending them to centralized exchanges. Some are in the high-risk category, meaning that
they tend to have relaxed compliance procedures, but mostly to mainstream exchanges
with more established compliance programs. We also see substantial funds sent to both
mixers and addresses associated with other forms of illicit activity.
The money laundering trends get even more interesting if we drill down to the individual
services receiving funds from ransomware.
Services receiving funds from ransomware addresses | 2020–2021
International exchange 1
Mixing service 1

International exchange 3
Mixing service 2

International exchange 2

Highrisk exchange 1

All others

100%

75%

50%

25%

0%
2020Q1

2020Q2

2020Q3

2020Q4

2021Q1

2021Q2

2021Q3

Amazingly, 56% of funds sent from ransomware addresses since 2020 have wound up at
one of six cryptocurrency businesses:
• Three large, international exchanges
• One high-risk exchange based in Russia
• Two mixing services
Similar to the rebranding activity we described above, these money laundering trends
show how small the ransomware ecosystem really is. That’s good news, as it means
the strategy for fighting ransomware is likely simpler than it appears at first glance.
By cracking down on the small number of services that facilitate this money laundering
activity, law enforcement can significantly reduce attackers’ options for cashing out,
reducing the financial incentive to carry out ransomware attacks and hampering
ransomware organizations’ ability to operate.
RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

2021’s rebranding craze shows the ransomware ecosystem is smaller
than we think
As we discussed above, most ransomware strains aren’t active for very long. While this
has always been the case to some degree, the trend has become even more pronounced
in 2021.
Average lifespan of a ransomware strain | 2017–2021
600
502

Number of days active

447
378

400

200

168

60
0
2017

2018

2019

2020

2021

Two years ago, the average ransomware strain remained active for exactly one year.
In 2021, the average strain is active for no more than two months. Why is the average
ransomware lifespan dropping so quickly?
One big reason is rebranding. More than ever in 2021, cybersecurity researchers have
noted instances of ransomware attackers publicly claiming to cease operations, only to
relaunch later under a new name — the giveaway is usually similarities in the ransomware’s code, as well as intelligence gathered from cybercriminal forums and blockchain
analysis. So, while at least 140 ransomware strains were active in 2021, many of those
strains were in fact run by the same cybercriminal groups.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

These strains attempt to create the illusion that they belong to different cybercriminal
organizations by setting up separate victim payment sites and other infrastructure, but
share similarities in their code. Evil Corp, a Russia-based cybercriminal gang behind
several ransomware attacks in recent years, has launched several rebranded strains
throughout its history, including:
•
•
•
•
•

Doppelpaymer
Bitpaymer
WastedLocker
Hades
Phoenix Cryptolocker. This strain is notable for “shutting down” after one attack
that extorted $40 million — the largest known ransom ever paid.
• Grief. Grief exhibits code similarities to Doppelpaymer ransomware, including
the telltale use of Dridex malware. As of 2021, Grief is notable for demanding
ransomware payments in Monero.
• Macaw. Interestingly, Macaw uses a completely different negotiation method
than previous Evil Corp strains. In this way, Macaw could be described less as a
“rebrand” of an old strain and more as a unique strain launched by an existing
ransomware organization.
• PayloadBIN. Many cybersecurity analysts have reported that Evil Corp’s launch of
the PayloadBIN strain is intended to look like a rebrand of an old strain used by
another ransomware group, making PayloadBIN a double rebrand of sorts.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

We can also see evidence of some of these strains’ common ownership in their
cryptocurrency transaction histories. Check out the Chainalysis Reactor graph below.

This graph shows the money laundering process for five of the Evil Corp ransomware strains
we mentioned above. While all of them appear to be run by separate organizations, most
send funds derived from attacks to the same group of intermediary wallets, and from there
move funds to many of the same deposit addresses at high-risk exchanges.
But why does Evil Corp rebrand its ransomware strains so often? Most analysts believe
it’s an effort to evade sanctions. Evil Corp, whose leaders are suspected to have ties to
the Russian government, has been sanctioned by the United States since December 2019.
In October 2020, the U.S. Treasury’s Office of Foreign Asset Control (OFAC) reiterated
guidance that ransomware victims who pay ransoms to sanctioned groups could face
penalties. This put Evil Corp in a bad position, as it meant that many victims and their
representatives would likely be reluctant to pay them following due diligence on the
sanctions risk. By rebranding, Evil Corp likely believes it can fool victims into paying
before researchers can discover the potential sanctions risk.
Unfortunately, rebranding appears to have worked for Evil Corp in many cases, as victims
paid at least $85 million in ransoms to strains associated with the organization.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

Ransomware payment value to strains associated with Evil Corp | 2016–2021
$100,000,000

$75,000,000

$50,000,000

$25,000,000

$0
2016

2017

2018

2019

2020

2021

Of course, Evil Corp isn’t the only organization rebranding its ransomware strains. In July
2021, the group behind the DarkSide ransomware strain began launching attacks with a
very similar strain called BlackMatter. This came following DarkSide’s attack on Colonial
Pipeline and the FBI’s subsequent seizing of most of that ransom, and it’s our belief that
the rebrand came in response to pressure from law enforcement. One piece of evidence
supporting this is BlackMatter’s stated unwillingness to attack oil and gas companies —
that would make sense for a rebranded DarkSide, as the group’s attack on Colonial ended
poorly for them.
The uptick in ransomware rebranding is an important reminder that the ransomware
ecosystem is smaller than it appears at first glance. While new strains pop up all the time,
many of them are ultimately run or deployed by the same groups and individuals, all of
whom are likely feeling the pressure from law enforcement’s increasing efforts to prevent
attacks, seize extorted funds, and arrest the individuals responsible. Rebranding is one
way of evading those efforts, and suggests that investigators and cybersecurity professionals may be best served by studying ransomware attackers at the organizational level,
and focusing less on the unique strains.

Ransomware as a geopolitical weapon
Most ransomware attacks appear to be financially motivated. However, others appear to
be motivated by geopolitical goals, and seem more geared toward deception, espionage,
reputational damage and disruption of the enemy government’s operations.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

In cases where a ransomware strain contains no mechanism to collect payment or allow
victims to recover their files, we can be more certain that money isn’t the attackers’
primary motivation. And that’s exactly what we saw in a recent ransomware attack on
Ukrainian government agencies by hackers believed to be associated with the Russian
government.
As the Computer Emergency Response Team of Ukraine (CERT-UA) describes here, the
attack occurred on the night of January 13, 2022, and disrupted several government
agencies’ ability to operate. The attack came against a backdrop of increasing tensions
between the two countries, with Russian troop build-ups along the Ukrainian border
causing concern that an invasion could be imminent. We saw a similar situation unfold
in 2017, when tensions between the two nations were also running high. At that time,
the Russia-based NotPetya ransomware strain, which contained no viable payment
mechanism, targeted several Ukrainian organizations and was also widely judged to be a
geopolitically motivated disruption attempt by the Russian military rather than a moneymaking effort.
Microsoft Security published its own analysis of the recent attack, noting that the
ransomware strain in question — dubbed DEV-0586 or more commonly known as
WhisperGate— has no way of returning victims’ access to their files. Microsoft Security’s
blog also includes the message the ransomware group displayed to its Ukrainian victims.

Credit: Microsoft Security Blog

DEV-0586’s address doesn’t have an extensive transaction history for us to draw from.
But further analysis of the ransomware’s technical characteristics indicates even more
geopolitical gamesmanship. On January 26, CERT-UA released a report showing that
DEV-0586 contains code repurposed from WhiteBlackCrypt, a ransomware strain active
in 2021 that, like DEV-0586, is designed to wipe victims’ systems rather than extort them
for money. But there’s a twist: WhiteBlackCrypt targeted Russian organizations rather
than Ukrainian ones. Cybersecurity analysts believe DEV-0586’s reuse of code previously

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

used by WhiteBlackCrypt, as well as the presence of other similarities linking the two
strains, is a gambit by Russian hackers to make DEV-0586 appear to be of Ukrainian
rather than Russian origin — in other words, a false flag attack. The gambit shows how
far state actors using ransomware to attack foes will go to conceal their attacks’ origins
and maintain plausible deniability. We’ll continue to monitor DEV-0586’s address for
more activity and provide updates when possible.
Russia-affiliated attackers aren’t the only ones using ransomware for geopolitical ends.
Cybersecurity analysts at Crowdstrike and Microsoft have concluded that many attacks
by ransomware strains affiliated with Iran, mostly targeting organizations in the U.S.,
the E.U., and Israel, are geared more toward causing disruption or serving as a ruse to
conceal espionage activity. Generally speaking, Chainalysis has seen significant growth
over the last year in the number of ransomware strains attributed to Iranian cybercriminals in the past year — in fact, Iran accounts for more individual identified strains than
any other country.
Number of ransomware strains with suspected links to specific countries
25
21
20
16
15

2
0
Iran

Russia

China

North Korea

To be clear, many of those Iranian ransomware strains are used for conventional, financially motivated attacks by cybercriminals operating in the country. Iran has a highly
educated population but limited occupational opportunities, which likely contributes to
the allure of ransomware. However, other strains behave more like tools of espionage,
extorting negligible amounts of cryptocurrency from victims. Other analysts have previously identified instances of strains affiliated with China, such as ColdLock, carrying out
similar geopolitical attacks on Taiwanese organizations.
RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

Ransomware is a useful cover for strategic denial and deception against enemy states
because attacks can be carried out cheaply, and it gives the attacking nation some
measure of plausible deniability, as they can always claim the attack was carried out
by mere cybercriminals or another nation state. But even ransomware attacks carried
out for non-financial reasons leave a trail on the blockchain. For that reason, it’s crucial
that agencies focused on national security understand how to trace funds using blockchain analysis, as this is the key to identifying the individuals involved in the attacks
themselves, the tools they use, and how they launder any funds obtained from victims.

Chainalysis in action: How FBI investigators tracked and seized funds
from DarkSide following the Colonial Pipeline ransomware attack
On May 7, 2021, Colonial Pipeline, an oil pipeline company that supplies energy to the
southeastern United States, fell victim to a ransomware attack, forcing it to temporarily
cease operations. Within hours of the attack, Colonial paid a ransom of 75 Bitcoin —
worth roughly $4.4 million at the time — to DarkSide, the Russia-based cybercriminal
group responsible for the attack. Six days later, Colonial was able to resume operations,
but during that time, the shutdown combined with panic buying as the news spread
resulted in fuel shortages in several areas.
One month later, there was good news: The Department of Justice announced that it had
managed to seize $2.3 million worth of Bitcoin from Colonial’s ransom payment following
an FBI investigation. Chainalysis is proud to say that our tools aided the FBI, and that
we can now share details of how investigators tracked the funds following the attack.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

Let’s start by looking at the ransom payment itself and the initial movement of funds
using Chainalysis Reactor.

First, on the left, we see the initial payment of 75 Bitcoin from Colonial to the address
provided by the attackers. Soon after, that address transferred the funds to an address
controlled by DarkSide’s administrators, who then sent 63.7 Bitcoin — 85% of Colonial’s
payment — to the affiliate who controlled the attack. That point is key — DarkSide
operates on the Ransomware as a Service (RaaS) model, meaning the affiliates who carry
out the attack effectively “rent” usage of DarkSide’s technology from the core group of
administrators who created and manage the ransomware strain itself. Administrators
take a small cut of the payment from each successful attack in return, as we see above.
Interestingly, the affiliate in question had previously received payments from addresses
associated with NetWalker, another ransomware strain operating on the RaaS model that
was disrupted by law enforcement in January 2021.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

The affiliate received a total of 595.3 Bitcoin from the NetWalker administrator in a series
of four payments in late May and early June of 2020, suggesting that they may have also
carried out attacks for that strain as well. This wouldn’t be surprising, as we’ve noted
other instances of affiliate overlap between ransomware strains in the past.
After tracking the funds to the affiliate’s address, FBI investigators were able to seize the
funds on May 28, 2021.

The seizure represents a huge step forward in the fight against ransomware, and
especially ransomware strains that attack our critical infrastructure. We continue to
monitor the movement of funds using our tools so that we can provide helpful insight to
authorities as they investigate further and, hopefully, seize the remainder of the funds.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

What’s next for ransomware?
Ransomware isn’t just dangerous. It’s also one of the most dynamic, constantly changing
forms of cryptocurrency-based crime. Between constant rebrands, shifting money
laundering strategies, and the influence of geopolitics, it’s hard to know what’s coming
next. One trend to look out for though is Monero ransoms. Analysts have noted that more
and more attackers are demanding victims pay in Monero, likely due to the heightened
anonymity it offers. While the vast majority of attackers continue to demand Bitcoin, law
enforcement and cybersecurity professionals should keep an eye out for ransom notes
requesting Monero or assets associated with other protocols with privacy-enhancing
features, as this will change the investigative tactics they must employ.
There’s only one thing that’s certain in ransomware: Law enforcement will continue to
investigate the cybercriminals responsible, and Chainalysis software and services will be
there to help them every step of the way. Events like the seizure of funds from DarkSide
show that we’re making progress, and we look forward to keeping up the fight in 2022.

RANSOMWARE

THE 2022 CRYPTO CRIME REPORT

Malware

THE 2022 CRYPTO CRIME REPORT

Meet the Malware Families Helping Hackers Steal and
Mine Millions in Cryptocurrency
When it comes to cryptocurrency theft, industry observers tend to focus on attacks
against large organizations — namely hacks of cryptocurrency exchanges or ransomware
attacks against critical infrastructure. But over the last few years, we’ve observed hackers
using malware to steal smaller amounts of cryptocurrency from individual users.
Using malware to steal or extort cryptocurrency is nothing new. In fact, nearly all
ransomware strains are initially delivered to victims’ devices through malware, and many
large-scale exchange hacks also involve malware. But these attacks take careful planning
and skill to pull off, as they’re typically targeted against deep-pocketed, professional
organizations and, if successful, require hackers to launder large sums of cryptocurrency.
With other types of malware, less sophisticated hackers can take a cheaper “spray-andpray” approach, spamming millions of potential victims and stealing smaller amounts
from each individual tricked into downloading the malware. Many of these malware
strains are available for purchase on the darknet, making it even easier for less sophisticated hackers to deploy them against victims.
We’re equipping our partners in law enforcement, compliance, and cybersecurity
to combat this problem by adding a new tag for malware operator addresses in all
Chainalysis products. Below, we’ll examine trends in hackers’ usage of cryptocurrency-focused malware over the last decade and share two case studies to help you understand
this under-discussed area of crypto crime.

MALWARE

THE 2022 CRYPTO CRIME REPORT

Malware and cryptocurrency summarized
Malware refers to malicious software that carries out harmful activity on a victim’s
device, usually without their knowledge. Malware-powered crime can be as simple as
stealing information or money from victims, but can also be much more complex and
grand in scale. For instance, malware operators who have infected enough devices can
use those devices as a botnet, having them work in concert to carry out distributed
denial-of-service (DDOS) attacks, commit ad fraud, or send spam emails to spread the
malware further.
The malware families we discuss here are all used to steal cryptocurrency from victims,
though some of them are used for other activities as well. The grid below breaks down
the most common types of cryptocurrency-focused malware families.

Type

Description

Example

Info stealers

Collect saved credentials, files, autocomplete history, and
cryptocurrency wallets from compromised computers.

Redline

Clippers

Can insert new text into the victim’s clipboard, replacing
text the user has copied. Hackers can use clippers to replace
cryptocurrency addresses copied into the clipboard with their
own, allowing them to reroute planned transactions to their
own wallets.

HackBoss

Cryptojackers

Makes unauthorized use of victim device’s computing power to
mine cryptocurrency.

Glupteba

Trojans

Virus that looks like a legitimate program but infiltrates
victim’s computer to disrupt operations, steal, or cause other
types of harm.

Mekotio banking
trojan

Many of the malware families described above are available to purchase for relatively
little money on cybercriminal forums. For instance, the screenshots below show an advertisement for Redline, an info stealer malware, posted on a Russian cybercrime forum.

MALWARE

THE 2022 CRYPTO CRIME REPORT

The seller offers cybercriminals one month of Redline access for $150 and lifetime access for
$800. Buyers also get access to Spectrum Crypt Service, a Telegram-based tool that allows
cybercriminals to encrypt Redline so that it’s more difficult for victims’ antivirus software
to detect it once it’s been downloaded. The proliferation of cheap access to malware
families like Redline means that even relatively low-skilled cybercriminals can use them to
steal cryptocurrency. Law enforcement and compliance teams must keep this in mind, and
understand that the malware attacks they investigate aren’t necessarily carried out by the
administrators of the malware family itself, but instead are often carried out by smaller
groups renting access to the malware family, similar to ransomware affiliates.
The graph below shows the number of victim transfers to cryptocurrency addresses
associated with a sample of malware families in the info stealer and clipper categories
investigated by Chainalysis.

MALWARE

THE 2022 CRYPTO CRIME REPORT

Transfers to known info stealer and clipper malware addresses | 2017–2021
8,000
7,439
6,000
5,447

5,574

2020

2021

4,000
3,604
2,512

2,000

0
2017

2018

2019

Note: This graph does not reflect activity by cryptojackers or ransomware.

Overall, the malware families in this sample have received 5,574 transfers from victims in
2021, up from 5,447 in 2020.
Which malware families were most active?
Sample of malware strains by number of cryptocurrency transfers from victims | 2021
2,500

2,000

1,500

1,000

500

0
cryptbot

Unnamed
stealer 1

Phorpiex

HackBoss
crypto stealer

Redline

MyKings botnet
(stealer)

QuilClipper

Note: This graph does not reflect activity by cryptojackers or ransomware.

Cryptbot, an infostealer that takes victims’ cryptocurrency wallet and account credentials, was the most prolific malware family in the group, raking in almost half a million
dollars in pilfered Bitcoin. Another prolific family is QuilClipper, a clipboard stealer or
“clipper,” ranked eighth on the graph above. Clippers can be used to insert new text
MALWARE

THE 2022 CRYPTO CRIME REPORT

into the “clipboard” that holds text a user has copied, usually with the intent to paste
elsewhere. Clippers typically use this functionality to detect when a user has copied a
cryptocurrency address to which they intend to send funds — the clipper malware effectively hijacks the transaction by then substituting an address controlled by the hacker for
the one copied by the user, thereby tricking the user into sending cryptocurrency to the
hacker.
However, none of those numbers reflect totals from what we believe to be the most
prolific type of cryptocurrency-focused malware: Cryptojackers.

Cryptojacker activity is murky but substantial
Cryptojackers obtain funds for malware operators by utilizing the victim’s computing
power to mine cryptocurrency — usually Monero, but we’ve seen Zcash and Ethereum
mined as well. Since funds are moving directly from the mempool to mining addresses
unknown to us, rather than from the victim’s wallet to a new wallet, it’s more difficult
to passively collect data on cryptojacking activity the way we can other forms of
cryptocurrency-based crime. However, we know it’s a big problem. In 2020, Cisco’s cloud
security division reported that cryptojacking malware affected 69% of its clients, which
would translate to an incredible amount of stolen computer power, and therefore a significant amount of illicitly-mined cryptocurrency. A 2018 report from Palo Alto Networks
estimated that 5% of all Monero in circulation was mined by cryptojackers, which would
represent over $100 million in revenue, making cryptojackers the most prolific form of
cryptocurrency-focused malware.
Total value received by malware type
Information Stealer
1%
Other
5%

Clipper
1%

Trojan
19%

Cryptojacking
73%

MALWARE

THE 2022 CRYPTO CRIME REPORT

These numbers are likely only scratching the surface for cryptojacking. As we identify
more malware families involved in this activity, we expect to learn that total revenue for
the category is even bigger than it currently appears.

Malware and money laundering
The vast majority of malware operators receive initial victim payments at private wallet
addresses, though a few use addresses hosted by larger services. Of that smaller group,
the majority use addresses hosted by exchanges — mostly high-risk exchanges that have
low or no KYC (Know Your Customer) requirements.
Malware operator addresses by hosting platform
Exchange
0.4%

Highrisk Exchange
1.3%

Private Wallet
98%

After receiving cryptocurrency from victims, malware operators then send the majority of
funds on to addresses at centralized exchanges.

MALWARE

THE 2022 CRYPTO CRIME REPORT

Destination of funds leaving malware family addresses | 2016–2021
Other

Gambling platform

Mixing

High-risk exchange

Illicit

DeFi

Centralized exchange

100%

75%

50%

25%

0%
2016

2017

2018

2019

2020

2021

However, that majority is slim and getting slimmer. Exchanges only received 54% of
funds sent from malware addresses in 2021, down from 75% in 2020. DeFi protocols make
up much of the difference at 20% in 2021, after having received a negligible share of
malware funds in 2020. Illicit services seemingly unrelated to malware — mostly darknet
markets — are also a significant money laundering avenue for malware operators, having
received roughly 15% of all funds sent from malware addresses in 2021.
Malware-based cryptocurrency theft is difficult to investigate in part due to the large
number of less sophisticated cybercriminals who can rent access to these malware
families. But studying how cybercriminals launder stolen cryptocurrency may be investigators’ best bet for finding those involved. Using blockchain analysis, investigators can
follow the funds, find the deposit addresses cybercriminals use to cash out, and subpoena
the services hosting those addresses to identify the attackers.

Investigating the HackBoss clipper
According to Chainalysis data, the HackBoss clipper stole over $80,000 worth of
cryptocurrency throughout 2021. Since 2012, HackBoss has been the most prolific
clipper malware overall, having taken over $560,000 from victims in assets like Bitcoin,
Ethereum, Ripple, and more.

MALWARE

THE 2022 CRYPTO CRIME REPORT

Clipper malware families by all-time revenue
$600,000

$400,000

$200,000

pe
Un

lip

uf
Sh
to
yp
Cr

r
fle

r1
m
na

itc

gs
yK
M

pi
or
Ph

s
os
kB
H

lip

Interestingly, HackBoss is targeted at fellow hackers rather than what we think of as
ordinary victims. According to reporting from Avast.io’s Decoded, HackBoss is distributed
through a Telegram channel that purports to provide hacking tools such as social
media site crackers. However, instead of those tools, the channel’s users are actually
downloading the HackBoss clipper, which steals cryptocurrency from them by inserting
its own addresses into the clipboard when victims attempt to copy and paste another
address to carry out a cryptocurrency transaction.

MALWARE

THE 2022 CRYPTO CRIME REPORT

The Chainalysis Reactor graph above shows HackBoss receiving cryptocurrency from
victims on the left. From there, the malware operators move funds to deposit addresses
hosted by high-risk exchanges.
While HackBoss is uniquely targeted at hackers attempting to download tools to carry
out their own cybercrimes, most other clippers are targeted at ordinary cryptocurrency
users. It’s extremely difficult to know if one has fallen victim to a clipper until a transaction has been hijacked given how long and complex cryptocurrency addresses are — most
people don’t read through the recipient’s entire address between pasting it into their
wallet and sending a transaction. However, that may be necessary for users trying to be
as careful as possible. At the very least, cryptocurrency users need to be vigilant about
what links they click and programs they download, as there are several active malware
strains — not just clippers, but others too — attempting to steal their funds.

Case study: Glupteba botnet hijacks computers to mine Monero and
harnesses the Bitcoin blockchain to evade shutdown
A complaint filed by Google in late 2021 named multiple Russian nationals and entities
alleged to be responsible for operating the Glupteba botnet, which has compromised
over 1 million machines. Glupteba’s operators have used these machines for several
criminal schemes, including utilizing their computing power to mine cryptocurrency —
specifically, in this case, Monero — in a practice known as cryptojacking.
Perhaps most notable is Glupteba’s use of the Bitcoin blockchain to withstand attempts
to take it offline, encoding updated command-and-control servers (C2) into the
Op_Returns of Bitcoin transactions. Google used Chainalysis software and Chainalysis
Investigative Services to analyze the Bitcoin addresses and transactions responsible
for sending updated C2 instructions. Below, we’ll break down how the Glupteba botnet
uses the Bitcoin blockchain to defend itself and what it means for cybersecurity and
law enforcement.

A primer on the Glupteba botnet
The cybercriminals behind the Glupteba botnet have used it to carry out a variety of
criminal schemes. In addition to cryptojacking, the botnet has been used to acquire
and sell Google account information stolen from infected machines, commit digital
advertising fraud, and sell stolen credit card data.
Google was able to identify the individuals named in the complaint by obtaining and
examining an IP address used by one of Glupteba’s C2 servers. All individuals were also

MALWARE

THE 2022 CRYPTO CRIME REPORT

listed as owners or administrators of shell companies connected to Glupteba-related
crimes, such as one used to sell fraudulent digital advertising impressions supplied by
the botnet. Google was able to successfully take down the current C2 server, however as
Glupteba has proven to be infallible against these actions through it’s blockchain failsafe,
we will soon see a new C2 assigned.

How Glupteba weaponizes the blockchain
In order to direct botnets, cybercriminals rely on command-and-control (C2) servers, which
allow them to send commands to machines infected with malware. Botnets look for domain
addresses controlled by their C2 servers in order to receive instructions, with directions on
where to look for those domain addresses hard coded into the malware itself.
In order to combat botnets, law enforcement and cybersecurity professionals try to take
those domains offline so that the botnets can no longer receive instructions from the C2
server. In response, botnet operators typically set up a number of backup domains in case
the active domain is taken down. Most malware algorithmically generates new domain
addresses for botnets to scan until they find one of those backups, allowing them to
receive new instructions from the C2 server.
However, Glupteba does something new. When its C2 server is disrupted, Glupteba
is programmed to search the Bitcoin blockchain for transactions carried out by three
addresses controlled by its operators. Those addresses carry out transactions of little or
no monetary value, with encrypted data written into the transaction’s Op_Return field,
which is used to mark transactions as invalid. Glupteba malware can then decode the
data entered into the Op_Return field to obtain the domain address of a new C2 server.
In other words, whenever one of Glupteba’s C2 servers is shut down, it can simply scan
the blockchain to find the new C2 server domain address, hidden amongst hundreds of
thousands of daily transactions. This tactic makes the Glupteba botnet extremely difficult
to disrupt through conventional cybersecurity techniques focused on disabling C2 server
domains. This is the first known case of a botnet using this approach.

MALWARE

THE 2022 CRYPTO CRIME REPORT

Here’s what we know about the three Bitcoin addresses we’ve identified as being used by
Glupteba’s operators to keep the botnet online:

Address

Dates active

Number of
transfers

Number of
Op_Returns

15y7dskU5TqNHXRtu5wzBpXdY5mT4RZNC6

6/17/2019 – 5/13/2020

1CgPCp3E9399ZFodMnTSSvaf5TpGiym2N1

4/8/2020 – 10/19/2021

1CUhaTe3AiP9Tdr4B6wedoe9vNsymLiD97

10/13/21 – present

Combined, the three addresses have only transacted a few hundred dollars’ worth of
Bitcoin, but the messages encoded into the Op_Returns on some of those transactions
have helped the Glupteba botnet remain operational. Let’s look more closely at address
157d… in Chainalysis Reactor as an example.

MALWARE

THE 2022 CRYPTO CRIME REPORT

We see that the Glupteba address received its initial funding from a mixing service,
before initiating the invalid transactions with Op_Returns we see at the top of the graph.
The funds associated with those invalid transactions then travel to the refund wallets on
the right, and eventually back to the original Glupteba address. The other two addresses
show similar transaction patterns. Google identified the three Glupteba addresses and
brought them to Chainalysis, at which point our investigators were able to decode the
data contained in the Op_Returns’ message fields, allowing them to discover the new C2
server domain addresses being sent to the botnet.
Like address 15y7d…, address 1CgPC… was initially funded through outputs from mixing
transactions. However, the third address, 1Cuha…, received initial funding from another
private wallet address: bc1qhjuvzwcv0pp68kn2sqvx3d2k3pqfllv3c4vywd.

Interestingly, other transactions sent by bc1qh… have been associated with Federation
Tower, a luxury office building in Moscow that also housed Suex, a now-sanctioned
cryptocurrency OTC broker involved in money laundering for several forms of cybercrime, including ransomware. Reporting from Bloomberg and The New York Times
discusses other cryptocurrency businesses headquartered in Federation Tower, including
EggChange, an exchange that’s also been linked to cybercrime and whose founder, Denis
Dubnikov, was arrested by U.S. authorities in November 2021. These links raise more
questions about the interconnectedness of illicit, Russia-based cryptocurrency businesses
associated with malware and ransomware attacks.

Glupteba shows why all cybersecurity teams need to understand
cryptocurrency and blockchain analysis
Glupteba’s blockchain-based method of avoiding the shutdown of its botnet represents a
never-before-seen threat vector for cryptocurrencies. In the private sector, cryptocurrency
businesses and financial institutions have thus far typically been the ones tackling cases
involved in blockchain analysis, usually from an AML/CFT compliance perspective. But
this case shows that cybersecurity teams at virtually any company that could be a target
MALWARE

THE 2022 CRYPTO CRIME REPORT

for cybercriminals — especially those possessing large amounts of sensitive customer
data — must be well-versed in cryptocurrency and blockchain analysis in order to stay
ahead of cybercriminals. At Chainalysis, we’re eager to work with those teams to help
them understand how our tools can assist them in diagnosing and fighting these threats,
so that cryptocurrencies can’t be weaponized against them or their users.

The convergence of malware and cryptocurrency:
Same cybercriminals, new methods
The cybersecurity industry has been dealing with malware for years, but the usage
of these malicious programs to steal cryptocurrency means cybersecurity teams need new
tools in their toolbox. Chainalysis gives cybersecurity teams new avenues of
investigation for malware, allowing them to take advantage of blockchains’ transparency
and track the movement of funds that have been stolen until they reach an address
whose owner can be identified. Likewise, cryptocurrency compliance teams already
well-versed in blockchain analysis must educate themselves on malware in order to
ensure these threat actors aren’t taking advantage of their platforms to launder
stolen cryptocurrency.

MALWARE

THE 2022 CRYPTO CRIME REPORT

Stolen Funds

THE 2022 CRYPTO CRIME REPORT

More Than $3 Billion Stolen in 2021 As DeFi Thefts
Leap 1,330%
2021 was a big year for digital thieves. Throughout the year, $3.2 billion in cryptocurrency
was stolen from individuals and services — almost 6x the amount stolen in 2020.
Total value stolen and total number of thefts | 2015–2021
Total value stolen

Number of thefts
300

$4B

$3B
200

$2B
117
100
$1B
14

2015

2016

2018

2019

Number of theft incidents

Cryptocurrency value stolen

250

$0
2017

2020

2021

And that’s just part of the story: Approximately $2.3 billion of those funds were stolen from
DeFi platforms in particular, and the value stolen from these protocols catapulted 1,330%.
This shift toward DeFi-centric attacks doesn’t just sound pronounced—it looks like it, too.
In every year prior to 2021, centralized exchanges lost the most cryptocurrency to theft by a
large margin. But this year, DeFi platform thefts dwarfed exchange thefts by a factor of six.

STOLEN FUNDS

THE 2022 CRYPTO CRIME REPORT

Code exploits are a prominent feature in 2021’s cryptocurrency
theft landscape
Historically, cryptocurrency thefts have largely been the result of security breaches in
which hackers gain access to victims’ private keys — the crypto-equivalent of pickpocketing. These keys could be acquired through phishing, keylogging, social engineering, or
other techniques. From 2019 to 2021, almost 30% of all value was stolen from just this
type of hack.
Total value stolen by type of attack | 2019–2021
Unknown

Security breach

Other

Flash loan

Code exploit

100%

75%

50%

25%

0%
2019

2020

2021

Note: The “unknown” label means information about hack type is not publicly available. The “other” label
means the hack type is known but does not fit within our defined categories.

Annual total cryptocurrency value stolen by victim type | 2019–2021
2019

2020

2021

$2.5B

$2B

$1.5B

$1B

$500M

$0
Centralized exchange

STOLEN FUNDS

DeFi protocol

Other

THE 2022 CRYPTO CRIME REPORT

But with the rise of DeFi and the extensive smart contract capabilities that power those
platforms, deeper vulnerabilities have begun to emerge around the software underpinning these services. In 2021, code exploits and flash loan attacks—a type of exploit
involving price manipulation—accounted for a near-majority of total value stolen across
all services at 49.8%. And when examining only hacks on DeFi platforms, that figure
increases to 69.3%.
Total value stolen from DeFi protocols by attack type | 2019–2021
Unknown

Security breach

Other

Flash loan

Code exploit

100%

75%

50%

25%

0%
2019

2020

2021

These exploits occur for a variety of reasons. For one, in keeping with DeFi’s faith in
decentralization and transparency, open-source development is a staple of DeFi applications. This is an important and broadly positive trend: since DeFi protocols move funds
without human intervention, users need to be able to audit the underlying code in order
to trust the platform. But this also stands to benefit cybercriminals, who can analyze the
scripts for vulnerabilities and plan exploits in advance.
Another potential point of failure is DeFi platforms’ reliance on price oracles. Price oracles
are tasked with maintaining accurate asset pricing data for all cryptocurrencies on a
platform, and the job isn’t easy. Secure but slow oracles are vulnerable to arbitrage; fast
but insecure oracles are vulnerable to price manipulation. The latter type often leads to
flash loan attacks, which extracted a massive $364 million from DeFi platforms in 2021. In
the hack of Cream Finance, for example, a series of flash loans exploiting a vulnerability
in the way Cream calculated yUSD’s “pricePerShare” variable enabled attackers to inflate
yUSD price to double its true value, sell their shares, and make off with $130 million in
just one night.

STOLEN FUNDS

THE 2022 CRYPTO CRIME REPORT

These two dangers—inaccurate oracles and exploitable code—underscore the need for the
security of both. Fortunately, there are solutions. To ensure pricing accuracy,
decentralized price oracles like Chainlink can protect platforms against price manipulation attacks. To ensure the security of smart contracts, code audits can steel programs
against common hacks like reentrancy, unhandled exceptions, and transaction order
dependency.
But code audits aren’t infallible. Nearly 30% of code exploits occurred on platforms
audited within the last year, as well as a surprising 73% of flash loan attacks. This
highlights two potential shortfalls of code audits:
1. They may patch smart contract vulnerabilities in some cases, but not all;
2. They seldom guarantee that platforms’ price oracles are tamper-proof.
So while code audits can certainly help, DeFi protocols managing millions of users and
billions of dollars must adopt a more robust approach to platform security.

Lending platforms, Web3 infrastructure providers, DEXes and DAOs
are especially vulnerable
DeFi-related theft losses vs. number of theft incidents | 2020–2021
Number of thefts

Individuals

Decentralized exchanges (DEX)

DAOs

Private

Asset managers
Infrastructure services

Other
Lending platforms

$2.5B

125

$2B

100

$1.5B

$1B

35
$500M

0
2020

STOLEN FUNDS

2021

THE 2022 CRYPTO CRIME REPORT

In 2020 and 2021, lending platforms such as yield farming protocols endured the largest
losses, with $923 million in total stolen funds and 64 theft incidents. Infrastructure
services like cross-chain protocols and oracles-as-a-service came in close second, with
DEXes and DAOs reckoning with significant thefts as well.

Following the money: the final destinations of stolen cryptocurrencies
In the aftermath of cryptocurrency thefts, more stolen funds flowed to DeFi platforms
(51%) and risky services (25%) this year than ever before. Centralized exchanges, once
a top destination for stolen funds, fell out of favor in 2021, receiving less than 15% of
the funds. This is likely due to the embrace of AML and KYC procedures among major
exchanges—an existential threat to the anonymity of cybercriminals.
Destination of stolen funds | 2015–2021
Risky

P2P exchange

Other

Gambling platform

Mining

Merchant services

Exchange

Illicit

DeFi

100%

75%

50%

25%

0%
2015

2016

2017

2018

2019

2020

2021

Note: “Risky” refers to services like mixers, high-risk exchanges, and services based in high-risk jurisdictions.

STOLEN FUNDS

THE 2022 CRYPTO CRIME REPORT

The biggest cryptocurrency thefts of 2021
As is the case most years, the ten largest hacks of 2021 accounted for a majority of the
funds stolen at $1.81 billion. Seven of these ten attacks targeted DeFi platforms in particular. The table below breaks down the details of each theft.

The 10 Largest Cryptocurrency Thefts of 2021
Victim

Poly Network

Amount
stolen (USD)

$613 million

Service Type

DeFi platform

Hack Type

Code exploit

Description
An attacker exploited
cross-chain relay contracts to
extract Poly Network funds
from three different chains:
Ethereum, BSC, and Polygon.
The attacker ultimately
returned the stolen funds.
Read our complete case study.

BitMart

$200 million

Exchange

Security Breach

Attackers stole a private key
that compromised two of
BitMart’s hot wallets.
Attackers used a compromised cloudflare API key to

BadgerDAO

Undisclosed

$150 million

$145 million

DeFi platform

Private

Security Breach

Other —
Embezzlement

periodically inject malicious
scripts into the Badger application. The scripts intercepted
transactions and prompted
users to allow a foreign
address to operate on the
ERC-20 tokens in their wallet.
Once approved, the attacker
siphoned funds from the user’s
wallets.
Employee allegedly diverted
funds to a personal account
when the company attempted
to transfer funds between
financial accounts.

Continued on the next page

STOLEN FUNDS

THE 2022 CRYPTO CRIME REPORT

Venus

BXH

Cream Finance

Vulcan Forged

Undisclosed

STOLEN FUNDS

$145 million

$139 million

$130 million

$103 million

$91 million

DeFi platform

Exchange

Code Exploit

Other — Leaked
Private Keys

Attackers manipulated the
price of XVS, Venus Protocol’s
governance token, in order to
borrow quantities of BTC and
ETH in excess of XVS’s actual
value. When the governance
token’s price declined and the
collateral of the users who
defaulted on their loans was
liquidated, Venus was left
with a debt of $145 million.
An unidentified member
of BXH’s technical team
allegedly leaked an administrator’s private key.

Flash Loan

First, attackers initiated a
series of flash loans to mint
~$1.5M of crYUSD. Then, the
attacker took advantage of
Cream’s PriceOracleProxy
function to artificially inflate
the value of its crYUSD
to ~$3B. $2B of this was
withdrawn in order to repay
the attacker’s outstanding
flash loans, while the
remaining $1B was used to
drain all of Cream’s assets
available for lending ($130M).

Security Breach

Attacker gained access to the
private keys of 96 addresses
and sent their contents to
hacker-controlled wallets.

Code Exploit

Attacker used the platform’s
content delivery network
(CDN) to respond to queries
with malicious code that stole
user assets

Security Breach

Attacker gained access to the
private keys of the service’s
internet-connected hot
wallets.

THE 2022 CRYPTO CRIME REPORT

2021 in cryptocurrency theft: A cautionary tale for DeFi developers
As the total value locked in DeFi climbs to ever-greater all-time highs—$256 billion at last
peak—so too does the risk of exploitation. If there’s one takeaway from the meteoric rise
of thefts from DeFi platforms, it’s the need for smart contract security and price oracle
accuracy. Code audits, decentralized oracle providers, and an altogether more rigorous
approach to platform security could be the ideal means to that end.
Fortunately, even when these functions do fail and cryptocurrencies are stolen, blockchain
analysis can help. Investigators with a full picture of the movement of funds from address
to address can take advantage of opportunities to halt assets in transit, stopping bad
actors before they cash out.

STOLEN FUNDS

THE 2022 CRYPTO CRIME REPORT

Scams

THE 2022 CRYPTO CRIME REPORT

The Biggest Threat to Trust in Cryptocurrency: Rug
Pulls Put 2021 Scam Revenue Close to All-time Highs
Scams were once again the largest form of cryptocurrency-based crime by transaction
volume, with over $7.7 billion worth of cryptocurrency taken from victims worldwide.
Total yearly cryptocurrency value received by scammers | 2017–2021
Rug pulls

Other scams

$10B

$7.5B

$5B

$2.5B

$0
2017

2018

2019

2020

2021

That represents a rise of 81% compared to 2020, a year in which scamming activity
dropped significantly compared to 2019, in large part due to the absence of any
large-scale Ponzi schemes. That changed in 2021 with Finiko, a Ponzi scheme primarily
targeting Russian speakers throughout Eastern Europe, netting more than $1.1 billion
from victims.
Another change that contributed to 2021’s increase in scam revenue: the emergence
of rug pulls, a relatively new scam type particularly common in the DeFi ecosystem, in
which the developers of a cryptocurrency project — typically a new token — abandon it
unexpectedly, taking users’ funds with them. We’ll look at both rug pulls and the Finiko
Ponzi scheme in more detail later in the report.
As the largest form of cryptocurrency-based crime and one uniquely targeted toward new
users, scamming poses one of the biggest threats to cryptocurrency’s continued adoption.
But as we’ll explore, some cryptocurrency businesses are taking innovative steps to
leverage blockchain data to protect their users and nip scams in the bud before potential
victims make deposits.

SCAMS

THE 2022 CRYPTO CRIME REPORT

Investment scams in 2021: More scams, shorter lifespans
While total scam revenue increased significantly in 2021, it stayed flat if we remove rug
pulls and limit our analysis to financial scams — even with the emergence of Finiko. At
the same time though, the number of deposits to scam addresses fell from just under
10.7 million to 4.1 million, which we can assume means there were fewer individual scam
victims.
Total yearly cryptocurrency value received by investment scams | 2017–2021
Total deposits

Total value received

$10B

12.5M

10M

$8B

7.5M
$5B
5M
$3B

2.5M

$0B
2017

2018

2019

2020

2021

This also tells us that the average amount taken from each victim increased.
Scammers’ money laundering strategies haven’t changed all that much. As was the case
in previous years, most cryptocurrency sent from scam wallets ended up at mainstream
exchanges.
Destination of funds leaving investment scam addresses by year | 2017–2021
Unnamed service

Other

Mixing

Mining

Illicit

High-risk jurisdictions

Gambling platform

Exchange

DeFi

100%

75%

50%

25%

0%
2017

2018

2019

2020

2021

Exchanges using Chainalysis KYT for transaction monitoring can see this activity in real
time, and take action to prevent scammers from cashing out.

SCAMS

THE 2022 CRYPTO CRIME REPORT

The number of financial scams active at any point in the year — active meaning their
addresses were receiving funds — also rose significantly in 2021, from 2,052 in 2020
to 3,300.
Total number of unique active investment scams by year | 2017–2021
4,000

3,000

2,000

1,000

0
2017

2018

2019

2020

2021

This goes hand in hand with another trend we’ve observed over the last few years: The
average lifespan of a financial scam is getting shorter and shorter.
Lifespan of average scam by year | 2013–2021

Number of days scam is active

2,500

2,000

1,500

1,000

500

0
2013

2014

2015

2016

2017

2018

2019

2020

2021

The average financial scam was active for just 70 days in 2021, down from 192 in 2020.
Looking back further, the average cryptocurrency scam was active for 2,369 days, and
the figure has trended steadily downwards since then. One reason for this could be that
investigators are getting better at investigating and prosecuting scams. For instance, in
SCAMS

THE 2022 CRYPTO CRIME REPORT

September 2021, the CFTC filed charges against 14 investment scams touting themselves as
providing compliant cryptocurrency derivative trading services — a common scam typology
in the space — whereas in reality they had failed to register with the CFTC as futures
commission merchants. Previously, these scams may have been able to continue operating
for longer. As scammers become aware of these actions, they may feel more pressure to
close up shop before drawing the attention of regulators and law enforcement.
At the same time, we’re seeing the end of a long-standing statistical relationship
between cryptocurrency asset prices and scamming activity. Scams typically come in
waves corresponding with sustained price growth in popular cryptocurrencies like Bitcoin
and Ethereum, which typically also lead to influxes of new users. We see this reflected in
the chart below — scamming activity spiked following bull runs in 2017 and 2020.
This isn’t all that surprising. New, less savvy users attracted by cryptocurrency’s growth
are more likely to fall for scams than more seasoned users. However, the relationship
between asset prices and scamming activity now appears to be disappearing.
Index: Total value received by scams vs. ETH and BTC price, 30-day moving average
Index: Jan 2020 = 100 | JAN 2020– NOV 2021
Value received by scammers

Bitcoin price

Eth price

3,000

2,000

1,000

0
4/1/2020

7/1/2020

10/1/2020

1/1/2021

4/1/2021

7/1/2021

10/1/2021

Above, we see scam activity rise in concert with Bitcoin and Ethereum prices until 2021,
when scamming activity stays flat and even begins to drop regardless of whether prices
rise or fall.

Rug pulls are the latest innovation in scamming
Rug pulls have emerged as the go-to scam of the DeFi ecosystem, accounting for 37% of
all cryptocurrency scam revenue in 2021, versus just 1% in 2020.

SCAMS

THE 2022 CRYPTO CRIME REPORT

Total cryptocurrency value stolen in rug pulls versus number of rug pulls | 2020 VS. 2021
Number of rug pulls

$3B

$2B

$1B

Number of rug pulls

Total value (USD)

Total value stolen (USD)

$0
2020

2021

All in all, rug pulls took in more than $2.8 billion worth of cryptocurrency from victims
in 2021.
As is the case with much of the emerging terminology in cryptocurrency, the definition of
“rug pull” isn’t set in stone, but we generally use it to refer to cases in which developers
build out 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.
Rug pulls are most commonly seen in DeFi. More specifically, most rug pulls entail
developers creating new tokens and promoting them to investors, who trade for the new
token in the hopes the token will rise in value, which also provides liquidity to the project
— that’s how most DeFi projects start. In rug pulls, however, the developers eventually
drain the funds from the liquidity pool, sending the token’s value to zero, and disappear.
Rug pulls are prevalent in DeFi because with the right technical know-how, it’s cheap and
easy to create new tokens on the Ethereum blockchain or others and get them listed on
decentralized exchanges (DEXes) without a code audit. That last point is crucial — decentralized tokens are meant to be designed in such a way that investors holding governance
tokens can vote on things like how assets in the liquidity pool are used, which would
make it impossible for the developers to drain the pool’s funds. While code audits that
would catch these vulnerabilities are common in the space, they’re not required in order
to list on most DEXes, hence why we see so many rug pulls.

SCAMS

THE 2022 CRYPTO CRIME REPORT

The chart below shows 2021’s top 15 rug pulls in order of value stolen.
2021 Top 15 rug pulls by cryptocurrency value stolen | 2021
$10,000

$2,600

$100
$58.3

$50
$32

$31

$30
$22
$14

$12

$10

$6.7

fly

s
bu

ug
ly

nR
O
ar

$1.5

le
rt

pc
Po

es
Ap

Yi
Ev

$2.5

d
el

D
UI
Lu

am
Be

rn
tu
Sa

e
Sn

na
Fi

rk
ee
M

iu
an
Ur

0
10
Fi

na
m

O
DA
is

ub
An

$2.7

Loss (Millions of USD)

$1,000

It’s important to remember that not all rug pulls start as DeFi projects. In fact, the biggest
rug pull of the year centered on Thodex, a large Turkish centralized exchange whose CEO
disappeared soon after the exchange halted users’ ability to withdraw funds. In all, users
lost over $2 billion worth of cryptocurrency, which represents nearly 90% of all value stolen
in rug pulls. However, all the other rug pulls in 2021 began as DeFi projects.

SCAMS

THE 2022 CRYPTO CRIME REPORT

AnubisDAO, the second-biggest rug pull of 2021 at over $58 million worth of cryptocurrency stolen, provides an excellent example of how rug pulls in DeFi work.

AnubisDAO’s Twitter banner. Credit CryptoHubK

AnubisDAO launched on Thursday, October 28, 2021, claiming it planned to provide a
decentralized, free-floating currency backed by a basket of assets. With little more than a
DOGE-inspired logo — the project had no website or white paper, and all of its developers
went by pseudonyms — AnubisDAO raised nearly $60 million from investors practically
overnight, all of whom received the project’s ANKH token in exchange for funding the
project’s liquidity pool. But a mere 20 hours later, all the funds raised, primarily held in
wrapped Ethereum, disappeared from AnubisDAO’s liquidity pool, moving to a series of
new addresses.

We can see these transactions on the graph above. AnubisDAO used contracts created
through Balancer’s Liquidity Bootstrapping Protocol to receive and hold the wrapped
Ethereum investors sent to their liquidity pool in exchange for ANKH tokens. However, the
address that deployed the liquidity pool contract was already in possession of the vast
majority of the liquidity provider (LP) tokens for that pool. 20 hours after the sale began,
the address that created the pool cashed out it’s massive holdings of LP tokens, allowing

SCAMS

THE 2022 CRYPTO CRIME REPORT

them to make off with nearly all the wrapped Ethereum and ANKH tokens in the pool.
The thief then moved that wrapped Ethereum through a series of intermediary wallets.
Soon after this, the Twitter account that had acted as the public face of AnubisDAO went
offline, and ANKH’s value plummeted to zero.
Since the theft, there’s been a great deal of finger pointing and conflicting explanations.
One of the project’s pseudonymous founding developers claims another founder, who
had access to AnubisDAO’s liquidity pool, is solely responsible for the rug pull, while
that founder claims to have fallen victim to a phishing attack that compromised the
pool’s private keys — the evidence that founder has supplied doesn’t support that theory,
however. At this time, all signs point to a standard rug pull, but it’s unclear whether or not
all of the developers were in on it.
AnubisDAO should serve as a cautionary tale to investors evaluating similar opportunities. The most important takeaway is to avoid new tokens that haven’t undergone a code
audit. Code audits are a process by which a third-party firm analyzes the code of the
smart contract behind a new token or other DeFi project, and publicly confirms that the
contract’s governance rules are iron clad and contain no mechanisms that would allow for
the developers to make off with investors’ funds. They can also check for security vulnerabilities that could be exploited by hackers. OpenZeppelin is one example of a firm that
provides code audits, but there are several others that are also considered trustworthy.
Investors may also want to be wary of tokens that lack the public-facing materials one
would expect from a legitimate project, such as a website or white paper, as well as
tokens created by individuals not using their real names.
DeFi is one of the most exciting, innovative areas of the cryptocurrency ecosystem,
and there are clearly big opportunities for early adopters. But the newness of the space
and relative inexperience of many investors provides a prime landscape for scamming
opportunities by bad actors. It’ll be difficult for DeFi’s growth to continue if potential new
users don’t feel they can trust new projects, so it’s important that trusted information
sources in cryptocurrency — whether they’re influencers, media outlets, or project participants — help new users understand how to spot shady projects to avoid.

Finiko: 2021’s billion dollar Ponzi scheme
Finiko was a Russia-based Ponzi scheme that operated from December 2019 until July
2021, at which point it collapsed after users found they could no longer withdraw funds
from their accounts with the company. Finiko invited users to invest with either Bitcoin or
Tether, promising monthly returns of up to 30%, and eventually launched its own coin that
traded on several exchanges.

SCAMS

THE 2022 CRYPTO CRIME REPORT

According to the Moscow Times, Finiko was headed up by Kirill Doronin, a popular
Instagram influencer who has been associated with other Ponzi schemes. The article
notes that Finiko was able to take advantage of difficult economic conditions in Russia
exacerbated by the Covid pandemic, attracting users desperate to make extra money.
Chainalysis Reactor shows us how prolific the scam was.

During the roughly 19 months it remained active, Finiko received over $1.5 billion worth
of Bitcoin in over 800,000 separate deposits. While it’s unclear how many individual
victims were responsible for those deposits or how much of that $1.5 billion was paid

SCAMS

THE 2022 CRYPTO CRIME REPORT

out to investors to keep the Ponzi scheme going, it’s clear that Finiko represents a
massive fraud perpetrated against Eastern European cryptocurrency users, predominantly
in Russia and Ukraine.
As is the case with most scams, Finiko primarily received funds from victims’ addresses at
mainstream exchanges. However, we can also see that Finiko received funds from what
we’ve identified as a Russia-based money launderer.

This launderer has received millions of dollars’ worth of cryptocurrency from addresses
associated with ransomware, exchange hacks, and other forms of cryptocurrency-based
crime. While the amount the service has sent to Finiko is quite small — under 1 BTC
total — it serves as an example of how a scam can also be used to launder funds derived
from other criminal schemes. It’s also possible that Finiko has received funds from other
laundering services we’ve yet to identify.
Finiko sent most of its more than $1.5 billion worth of cryptocurrency to mainstream
exchanges, high-risk exchanges, a hosted wallet service, and a P2P exchange. However,
we don’t know what share of those transfers represent payments to victims in order to
give the appearance of successful investments.

SCAMS

THE 2022 CRYPTO CRIME REPORT

Finiko also sent $34 million to a DeFi protocol designed for cross-chain transactions via
a series of intermediary wallets, where it was likely converted into ERC-20 tokens and
sent elsewhere. It also sent roughly $3.9 million worth of cryptocurrency to a few popular
mixing services. Most interesting of all perhaps is Finiko’s transaction history with Suex,
an OTC broker that was sanctioned by OFAC for its role in laundering funds associated
with scams, ransomware attacks, and other forms of cryptocurrency-based crime.

Between March and July of 2020, Finiko sent over $9 million worth of Bitcoin to an
address that now appears as an identifier on Suex’s entry into the Specially Designated
Nationals (SDN) List. This connection underlines the prolificness of Suex as a money
laundering service, as well as the crucial role of such services generally in allowing largescale cybercriminal operations like Finiko to victimize cryptocurrency users.

SCAMS

THE 2022 CRYPTO CRIME REPORT

Soon after Finiko’s collapse in July 2021, Russian authorities arrested Doronin, and later
also nabbed Ilgiz Shakirov, one of his key partners in running the Ponzi scheme. Both men
remain in custody, and arrest warrants have reportedly been issued for the rest of Finiko’s
founding team.

How one cryptocurrency platform is saving users from scams
Mainstream cryptocurrency platforms like exchanges are in the perfect position to fight
back against scams and instill more trust in cryptocurrency by warning users or even
preventing them from executing those transactions. One popular platform did just that in
2021, and the results were extremely promising.
Luno is a leading cryptocurrency platform operating in over 40 countries, with an
especially heavy presence in South Africa. In 2020, a major scam was targeting South
African cryptocurrency users, promising outlandishly large investment returns. Knowing
that its users were at risk, Luno decided to take action in partnership with Chainalysis.
The first step was a warning and education campaign. Using in-app messages,
help center articles, emails, webinars, social media posts, YouTube videos, and even
one-on-one conversations, Luno showed users how to spot the red flags that indicate an
investment opportunity is likely a scam, and taught them to avoid pitches that appear
too good to be true.
Luno then went a step further and began preventing users from sending funds to
addresses it knew belonged to scammers. That’s where Chainalysis came in. As the
leading blockchain data platform, we have an entire team dedicated to unearthing
cryptocurrency scams and tagging their addresses in our compliance products. With that
data, Luno was able to halt users’ transfers to scams before they were processed. It was a
drastic strategy in many ways — cryptocurrency has historically been built on an ethos of
financial freedom, and some users were likely to chafe at a perceived limitation on their
ability to transact. But thanks to Chainalysis’ best in class cryptocurrency address attributions, Luno was able to establish the trust necessary to sell customers on the strategy.
Luno first began blocking scam payments for South African users only in November
2020, and then rolled the feature out worldwide in January 2021. The plan worked, and
transfers from Luno wallets to scams fell drastically over the course of 2021.

SCAMS

THE 2022 CRYPTO CRIME REPORT

Daily value received by scams from Luno, 30-day moving average
$800,000

$600,000

$400,000
Luno begins
blocking transfers
to scams for
South Africa users

$200,000
Luno begins
blocking transfers
to scams for
all users

$0
7/1/2020

10/1/2020

1/1/2021

4/1/2021

7/1/2021

10/1/2021

The moving 30-day average daily transaction volume of transfers to scams fell 88% from
$730,000 at its peak in September 2020, to just $90,000 by November. One customer
summed up the results perfectly, saying, “Thank you, Luno. I was about to lose my
pension and savings.”
Scams represent a huge barrier to successful cryptocurrency adoption, and fighting them
can’t be left only to law enforcement and regulators. Cryptocurrency businesses, financial
institutions, and, of course, Chainalysis have an important role to play as well. With this
strategy, Luno took a courageous step towards establishing greater trust and safety in
cryptocurrency, which we hope to continue to see grow in the industry.

SCAMS

THE 2022 CRYPTO CRIME REPORT

Terrorism Financing

THE 2022 CRYPTO CRIME REPORT

Al-Qaeda, ISIS, and Hamas Among Terrorist Groups
Fundraising in Cryptocurrency—With Government
Seizures Close Behind
By the end of 2021, we’ve identified a number of terrorist organizations that have
attempted to finance their operations with cryptocurrency. What’s harder to find,
however, is a group that has gotten away with it.
• In 2019 and 2020, al-Qaeda raised cryptocurrency through Telegram channels
and Facebook groups. Thanks to the FBI, HSI, and IRS-CI, more than $1 million
was seized from a money service business (MSB) operator who facilitated some
of these transactions.
• In early Spring of 2021, al-Qassam Brigades, Hamas’ military wing, collected more
than $100,000 in donations. In July, the Israeli government seized much of it from
associated MSBs.
Share of total terrorism financing activity by organization | 2017–2021
al Qaeda

Yaqub Foundations

Merciful Hands

Malhama Tactical

Hamas Al-Qassam

Ansaar International

2018

2019

Katibat Tawhid

ITMC

ISIS

Al Ikhwa

100.00%

75.00%

50.00%

25.00%

0.00%
2017

2020

2021

In the following section, we isolate three cases from 2021—one in June, one in July, and
another in December—that showcase governments’ recent successes in the fight against
cryptocurrency-financed terrorism.

TERRORISM FINANCING

THE 2022 CRYPTO CRIME REPORT

Case 1: Israeli Government Seizes Cryptocurrency Addresses
Associated with Hamas Donation Campaigns
On June 30th, Israel’s National Bureau for Counter Terror Financing (NBCTF) announced
the seizure of cryptocurrency held by several wallets associated with donation campaigns
carried out by Hamas. The action came after a sizable growth in cryptocurrency donations
to al-Qassam Brigades in May following increased fighting between the group and
Israeli forces.
Notably, this is the first terrorism financing-related cryptocurrency seizure to include such a
wide variety of digital currencies. NBCTF seized not only Bitcoin, but Ether, Tether, XRP, and
more. The seizure was made possible through an investigation of open-source intelligence
(OSINT) and blockchain data.
Below, we examine how the second of these—the analysis of blockchain data—contributed
to the case.

TERRORISM FINANCING

THE 2022 CRYPTO CRIME REPORT

How funds moved from donation addresses to exchanges
The Chainalysis Reactor graph below shows the Bitcoin portion of the transactions
carried out by many of the addresses listed in the NBCTF announcement. Many of these
addresses have been attributed to individuals connected to the donation campaigns.

TERRORISM FINANCING

THE 2022 CRYPTO CRIME REPORT

The orange hexagons represent deposit addresses hosted at large, mainstream cryptocurrency exchanges that are controlled by individuals named in the NBCTF announcement.
As we can see, the funds often passed through intermediary wallets, high-risk cryptocurrency exchanges, and money services businesses (MSBs) before reaching the exchanges
from which the named individuals likely hoped to cash out.
Interestingly, we can see that two donation addresses named in the announcement
received funds from addresses associated with the Idlib office of BitcoinTransfer (top right
of graph), a Syrian cryptocurrency exchange connected to previous terrorism financing
cases. Another received funds from a Middle East-based MSB that had previously received
funds from the Ibn Taymiyya Media Center (directly beneath the BitcoinTransfer cluster),
an organization that has also been associated with terrorism financing in the past.

The value of blockchain analysis in conjunction with other data sources
This investigation is a perfect example of the value of blockchain analysis, especially
when used in conjunction with other open source data. Israeli authorities analyzed
OSINT to find Hamas’ donation addresses and, with blockchain analysis tools, were able
to follow the funds to find consolidation addresses and uncover the names of individuals
associated with the campaigns. Up-to-date transaction data across several blockchains
was crucial in this case as agents tracked and seized funds of several different cryptocurrencies, not just one. We applaud the Israeli authorities for a successful operation
and look forward to providing valuable tools that facilitate more such successes for our
government customers around the world.

TERRORISM FINANCING

THE 2022 CRYPTO CRIME REPORT

Case 2: Terrorist Financier designated by the U.S. Office of Foreign
Assets Control (OFAC)
On July 28, 2021, OFAC sanctioned Farrukh Furkatovitch Fayzimatov for having materially assisted and supported Hay’et Tahrir al-Sham (HTS), a militant group involved in
the Syrian Civil War. Fayzimatov utilized social media to post propaganda, recruit new
members, and solicit donations to purchase equipment for the benefit of HTS.
His fundraising efforts have been linked to an address tracked by Chainalysis, the details
of which are depicted in the graph below.

On the left side of the graph, we find that Fayzimatov received funds directly from
centralized and P2P exchanges that did not collect know-your-customer information.
This indicates that the individuals sending bitcoin to Fayzimatov intended to keep their
activity anonymous. On the right, we observe that Fayzimatov sent funds to high-risk
exchanges based in Russia, one centralized exchange that did collect KYC information,
and a small sum to a suspected vendor at Hydra Marketplace, a Russian darknet market.
Following the OFAC designation, Fayzimatov’s on-chain activity ceased.

TERRORISM FINANCING

THE 2022 CRYPTO CRIME REPORT

Case 3: Wales-based convicted terrorist caught using darknet market
‘Bypass Shop’
In December, a 29-year-old man was sentenced to 16 months in jail for Bitcoin transactions made on the Bypass Shop, a darknet market for stolen credit card information.
The transactions were made from the man’s wallet at an exchange, which prompted the
company to issue a suspicious activity report. From there, police identified the man as
Khuram Iqbal of Cardiff, and arranged for his arrest.
This was not Iqbal’s first run-in with the law. Iqbal had been jailed in 2014 for possessing
terrorist information and disseminating terrorist publications under the pseudonym Abu
Irhaab—Arabic for “father of terrorism.” In total, Iqbal possessed nine copies of the
al-Qaeda magazine “Inspire,” and published more than 800 links to extremist material
on Facebook.
Before then, Iqbal made two attempts to join the jihadi cause by flying to Kenya and
Turkey. He was deported on both occasions.

Blockchain analysis: Governments’ best tool in the fight against
cryptocurrency-financed terrorism
As terrorist organizations adopt further blockchain technologies and cryptocurrency
fundraising techniques, it’s critical for governments to keep up. Our 2021 findings indicate
that many agencies have, and the rewards have been considerable.
Governments that have embraced blockchain analysis have seized millions of dollars in
cryptocurrency and stopped a number of terrorist financiers—further evidence that with
the proper tools, investigators can cut terrorist organizations off from the funds that
enable their rise.

TERRORISM FINANCING

THE 2022 CRYPTO CRIME REPORT

Darknet Markets

THE 2022 CRYPTO CRIME REPORT

Darknet Markets Hit All-time High in Revenue,
Eclipsing $2 Billion, Despite Their Decline
in Overall Number
Darknet markets set a new revenue record in 2021, bringing in a total of $2.1 billion in
cryptocurrency. Roughly $300 million of this total was generated by fraud shops, which
brokered the sale of stolen logins, credit cards, exploit kits, and more. The rest—more than
$1.8 billion—was generated by drug-focused markets.
Darknet market revenue by market category | 2012-2021
Fraud shop revenue

Drug market revenue
$2.5B

$2B

$1.5B

$1B

$500M

$0
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

We also identified an additional $112 million (not included above) in revenues for these
categories from direct buyer-to-vendor sales, meaning sales that didn’t use a darknet
market as an intermediary. We discuss this trend in greater detail later in this section.
Despite this illicit industry’s continued revenue growth, the number of active markets
actually fell this year. By the end of 2021, there were five fewer fraud shops and 13 fewer
drug-focused markets than at the end of 2020.

DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT 100

Number of active drug markets and fraud shops | 2012-2021
Drug markets

Fraud shops

100

0
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Interestingly, many of the market closures in 2021 were planned, with administrators
giving users the opportunity to withdraw their funds in advance. This is unusual; in the
past, market administrators closing shop often ran off with users’ funds in what is known
as an exit scam. But more recently, perhaps to avoid the unwanted investigations of
upset users, the primary administrative approach has changed.
As is typical, law enforcement investigations also contributed to or directly caused
many shutdowns. For instance, less than a month before Joker’s Stash announced
the fraud shop’s voluntary closure, the FBI and Interpol seized four of its blockchain
domains—.bazar, .lib, .emc, and .coin. Later, in June, a multinational operation seized
the infrastructure of Slil_PP, one of the largest fraud shops for stolen username-password
combinations. And in October, the Department of Justice announced the results of Dark
HunTor, an operation that resulted in the arrest of 150 drug traffickers and the closure
of two drug markets. Still other darknet markets, such as DarkMarket, Monopoly, and
CanadianHeadquarters, have shuttered after being caught in similar precarious situations this year.
For the darknet markets that remain, competition is fiercer than ever, and competitors
aren’t afraid to play dirty. Data leaks, DDoS attacks, and doxxes are common occurrences
in the space, according to Flashpoint’s Senior Director of Research Ian Gray. For example,
shortly after the relaunch of AlphaBay in August 2021, a DDoS attack was allegedly
conducted on the marketplace by “mr_white,” the administrator of the since-shuttered
White House Market. Another DDoS attack, this one unattributed, took Cannazon, a

DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT

101

marijuana-focused market, permanently offline. A third action, an alleged dox of Hydra
market’s administrators, was published on the hydra[.]expert domain in February.
These competitive threats, alongside other barriers to entry like finding a hosting
provider and retaining vendors, have made opening and operating a darknet market too
difficult for many would-be administrators—another explanation for the decline.

The Russia-based Hydra Market continues to dominate by total
revenue, but other markets outside of Eastern Europe also thrive
Hydra, a market that serves only Russian-speaking countries, remains the largest darknet
market by far. In 2021, Hydra accounted for 80% of darknet market revenue worldwide.
Darknet markets by share of total market | 2016-2021
Others

Abraxas Market

Nucleus Market

Flugsvamp Market 2.0

Empire Market

Hansa Market

Silk Road 2 Market

Evolution Market

Bypass Shop

Joker’s Stash Market

Unicc

FEshop

Wall Street Market
Agora Market

DarkMarket

Silk Road Marketplace

Dream Market

Flugsvamp Market 3.0

Russian Anonymous Marketplace

Hydra Marketplace

AlphaBay Market

100%

75%

50%

25%

0%
2016

2017

2018

2019

2020

2021

Hydra is distinct for its size, Russian focus, and variety of offerings: users of Hydra can
purchase both drugs and fraud-related goods and services on the website, though drugs
account for the majority of its sales. However, Hydra is so large that it can prevent our
data visualizations from showing the important role of other, more global markets.

DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT

102

Below, we exclude Hydra activity and find that the remaining markets are in much closer
competition.
Darknet markets by share of total market (excluding Hydra) | 2016-2021
Others

Abraxas Market

Nucleus Market

Flugsvamp Market 2.0

Empire Market

Hansa Market

Silk Road 2 Market

Evolution Market

Bypass Shop
Joker’s Stash Market

FEshop
Unicc

Wall Street Market
Agora Market

DarkMarket

Silk Road Marketplace

Dream Market

Flugsvamp Market 3.0

Russian Anonymous Marketplace

AlphaBay Market

100%

75%

50%

25%

0%
2016

2017

2018

2019

2020

2021

The five largest markets other than Hydra this year were, in descending order of
revenue: UniCC, FEshop, Flugsvamp Market, Bypass Shop, and DarkMarket. Of these five
markets, three were fraud shops (UniCC, FEshop, Bypass shop), two were drug markets
(Flugsvamp Market, DarkMarket), and two were taken down by law enforcement (UniCC
and DarkMarket). All of these markets serve customers worldwide, with the exception of
Flugsvamp, which serves only Swedish users.

As the number of transfers to drug markets and their user counts
dwindle, growing payment sizes more than compensate
Curiously, the number of transfers to drug-focused markets has fallen considerably over
the past five years, from 11.7 million in 2016 to just 3.7 million this year.

DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT

103

Number of transfers to drug markets and fraud shops | 2016-2021
Number of drug market transfers

Number of fraud shop transfers

12,500,000

10,000,000

7,500,000

5,000,000

2,500,000

0
2017

2018

2019

2020

2021

An “active user” is defined as any wallet that has sent or received more than $5 worth of cryptocurrency
to/from darknet markets during the year

The number of active users on drug markets has also undergone a decline, shrinking from
almost 1.7 million in 2016 to 1.2 million in 2021.
Number of active users of drug markets and fraud shops | 2016-2021
Drug markets

Fraud shops

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0
2016

2017

2018

2019

2020

2021

With drug market declines like these, one would expect overall drug market revenues
to fall, but in fact they’ve done the opposite. From 2016 to 2021, drug market revenue
growth averaged 35.7 percent per year. So if more users and more transfers aren’t behind
this growth, what is?
DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT 104

Our finding: bigger payments. From 2016 to 2021, the average payment size has leapt
from $160 to $493 worth of cryptocurrency.
Average payment size to drug markets and fraud shops
Drug market

Fraud shop

$500

$400

$300

$200

$100

$0
2016

2017

2018

2019

2020

2021

Interestingly, this trend has only played out with drug-focused markets, as the average
purchase price for fraud shops has remained flat. But there are several possible explanations for drug markets’ payment size rise. It could be the case that drug vendors are
now selling more to drug distributors than just drug users, or that some users who once
bought small quantities are now buying much more. But it could also be explained by per
unit price increases—it’s difficult to know for sure, as we can’t tell exactly what users are
ordering, or how much.
Whatever the explanation may be, it’s clear that the nature of darknet markets are
changing. Direct buyer-to-vendor sales, anonymous postage services, and privacy coins
are cases in point.

Darknet market buyers and vendors transact directly more than ever
Direct buyer-to-vendor sales—transactions that take place without going through a
darknet market—have been on the rise since 2019. We suspect that many of these buyervendor relationships were initially established on darknet markets, but that after a series
of successful purchases, the buyers and vendors then arranged to transact off-market
going forward.

DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT 105

Sales of this kind reached $112 million this year, equivalent to approximately 5% of total
darknet market revenues.
Total value sent directly from darknet market buyers to vendors | 2016-2021
$125,000,000

$100,000,000

$75,000,000

$50,000,000

$25,000,000

$0
2016
2017
2018
2019
2020
2021
A user is considered a vendor if they have received more than $5,000 in cryptocurrency from darknet
markets (DNMs) and are a net receiver of funds from DNMs. A user is considered a buyer if they have sent
more than $100 in cryptocurrency to darknet markets and are a net sender of funds to DNMs.

This growth in direct sales volume might be explained by a deepening trust between
long-time buyers and vendors, a growing distrust of darknet markets, a wish to avoid DNM
fees, a desire to avoid being linked to known illicit activity, or some combination of these.
On average, these direct sales channels are substantial in terms of dollar amount: the
average buyer sent a total of $8,441 worth of cryptocurrency to their preferred vendor
during 2021. Sums this considerable may be indicative of large-scale illicit activity,
whether it be attributed to drug trafficking or the sale of troves of financial data acquired
through fraud.

DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT 106

The median buyer, however, sent a total of just $603 to their preferred vendor this year.
Average and median value sent from each buyer to vendor per year | 2016-2021
Median

$10,000

$800

$7,500

$600

$5,000

$400

$2,500

$200

Median value sent

Average value sent

Average

$0
2016

2017

2018

2019

2020

2021

This suggests that while massive direct sales account for a large majority of total volume,
direct sales relationships exist at every size. In fact, this implies that more than half of all
buyer-to-vendor relationships likely operate at a retail level, with the buyer sending less
than $603 worth of cryptocurrency to the vendor during the year.
Nonetheless, the upper outliers are worth observing. Below, we visualize the eight largest
buyer-to-vendor relationships by total value sent in 2021.

DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT

107

Each of these top buyers and vendors dealing directly have previously transacted through
Hydra, presumably with one another (though we can’t know for sure), as denoted by the
grey lines. The blue lines, on the other hand, show direct transactions between the two
without Hydra as an intermediary. On average, each buyer in this relationship has sent
more than $3.1 million worth of cryptocurrency to their preferred vendor in 2021. This
aligns with our hypothesis that the biggest direct relationships have ties to large-scale
illicit activity.
We can analyze the transaction history of vendors like those shown above to better
understand their money laundering strategy, based on the types of services to which they
send funds.
Destination of funds leaving darknet market vendor addresses | 2016-2021
Other

P2P exchange

Mining

Illicit

Centralized exchange

High-risk exchange

Mixing

Gambling platform

100%

75%

50%

25%

0%
2016

2017

2018

2019

2020

2021

Mainstream centralized exchanges are the most common destination, with high-risk
exchanges and mixers also receiving a significant share.
Of course, not all funds sent from darknet market vendors indicate money laundering.
Vendors often use cryptocurrency to purchase products and services necessary for their
operations. Postage products and services — stamps, boxes, shipping labels, and the
like — are a perfect example, as drug vendors typically mail their products to buyers.
Chainalysis tracks several postage providers who accept payments in cryptocurrency, and
has identified several darknet market vendors sending those providers significant sums.

DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT 108

Top darknet market vendors by value sent to postage providers | 2021
$20,000

$15,000

$10,000

$5,000

$0
1

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

The most prolific of these vendors purchased over $17,000 worth of postage services
this year, all using cryptocurrency. Ten other vendors each spent more than $4,000. And
in aggregate, 322 vendors sent a combined $207,000 worth of cryptocurrency to these
services this year, underscoring the important role a seemingly niche service plays in
cryptocurrency-based crime.

Monero sees increased adoption as a darknet market payment method
Monero is seeing increased adoption among darknet markets this year, with the number
of markets supporting it growing from 45% last year to 67% in 2021. In fact, a few
markets, namely Archetyp, the revamped Alphabay, and the since-closed White House
Market, exclusively support Monero. Bitcoin still dominates the darknet market space,
however, with support from 93% of all markets.

DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT 109

Consolidation, competition, and caution defined darknet markets
in 2021
Even as the demand for drugs and stolen credentials has continued to move online,
competitors’ black hat tactics and law enforcement takedowns have driven many more
markets offline. In an abundance of caution, several markets have even closed voluntarily,
while the markets that have opened in their place have embraced privacy-enhanced
designs. Meanwhile, vendors have taken more steps than ever to enhance their shipping
anonymity, and buyers have begun to transact with these vendors directly. All of these
trends point to a darknet market industry that is fast maturing.
To solve cases that interface with darknet markets, investigators should be aware of
these trends and have access to the proper tools to address them. Chainalysis Reactor’s
extensive attributions, graphing capabilities, and investigation teams can provide just
that—the expertise and tooling needed to turn this blockchain data into actionable leads.

DARKNET MARKETS

THE 2022 CRYPTO CRIME REPORT

110

High-risk Jurisdictions
& Sanctions

THE 2022 CRYPTO CRIME REPORT

111

High-risk Jurisdictions
& Sanctions
North Korea

THE 2022 CRYPTO CRIME REPORT

112

North Korean Hackers Have Prolific Year as Their
Total Unlaundered Cryptocurrency Holdings Reach
All-time High
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
last year. These attacks targeted primarily investment firms and centralized exchanges,
and made use of phishing lures, code exploits, malware, and advanced social engineering
to siphon funds out of these organizations’ internet-connected “hot” wallets into
DPRK-controlled addresses. Once North Korea gained custody of the funds, they began a
careful laundering process to cover up and cash out.
These complex tactics and techniques have led many security researchers to characterize
cyber actors for the Democratic People’s Republic of Korea (DPRK) as advanced persistent
threats (APTs). This is especially true for APT 38, also known as “Lazarus Group,” which is
led by DPRK’s primary intelligence agency, the US- and UN-sanctioned Reconnaissance
General Bureau. While we will refer to the attackers as North Korean-linked hackers more
generally, many of these attacks were carried out by the Lazarus Group in particular.
Lazarus Group first gained notoriety from its Sony Pictures and WannaCry cyberattacks,
but it has since concentrated its efforts on cryptocurrency crime—a strategy that has
proven immensely profitable. From 2018 on, the group has stolen and laundered massive
sums of virtual currencies every year, typically in excess of $200 million. The most
successful individual hacks, one on KuCoin and another on an unnamed cryptocurrency
exchange, each netted more than $250 million alone. And according to the UN security
council, the revenue generated from these hacks goes to support North Korea’s WMD and
ballistic missile programs.

HIGH-RISK JURISDICTIONS & SANCTIONS NORTH KOREA

THE 2022 CRYPTO CRIME REPORT

113

In 2021, North Korean hacking activity was on the rise once again. From 2020 to 2021,
the number of North Korean-linked hacks jumped from four to seven, and the value
extracted from these hacks grew by 40%.
North Korean-linked hacks by total value stolen and total number of hacks | 2017–2021
Total value stolen

Number of hacks

$600M

8
$400M
6

4
$200M
2

0
2017

2018

2019

2020

2021

Interestingly, in terms of dollar value, Bitcoin now accounts for less than one fourth of
the cryptocurrencies stolen by DPRK. In 2021, only 20% of the stolen funds were Bitcoin,
whereas 22% were either ERC-20 tokens or altcoins. And for the first time ever, Ether
accounted for a majority of the funds stolen at 58%.
Share of funds stolen by DPRK by coin type | 2017–2021
ERC-20 tokens

Altcoins

ETH

BTC

100%

75%

50%

25%

0%
2017

2018

2019

HIGH-RISK JURISDICTIONS & SANCTIONS NORTH KOREA

2020

THE 2022 CRYPTO CRIME REPORT

2021

114

The growing variety of cryptocurrencies stolen has necessarily increased the complexity
of DPRK’s cryptocurrency laundering operation. Today, DPRK’s typical laundering process
is as follows:
1. ERC-20 tokens and altcoins are swapped for Ether via
decentralized exchange (DEX)
2. Ether is mixed
3. Mixed Ether is swapped for Bitcoin via DEX
4. Bitcoin is mixed
5. Mixed Bitcoin is consolidated into new wallets
6. Bitcoin is sent to deposit addresses at crypto-to-fiat exchanges
based in Asia —potential cash-out points
In fact, we observed a massive increase in the use of mixers among DPRK-linked actors
in 2021.
Laundering mechanisms used by DPRK | 2017–2021
Other exchanges
Mining

Illicit

Unnamed service

P2P exchange

High-eisk exchange

Other

Gambling platform

Mixing
DeFi

100%

75%

50%

25%

0%
2017

2018

2019

2020

2021

More than 65% of DPRK’s stolen funds were laundered through mixers this year, up from
42% in 2020 and 21% in 2019, suggesting that these threat actors have taken a more
cautious approach with each passing year.
Why mixers? DPRK is a systematic money launderer, and their use of multiple
mixers —software tools that pool and scramble cryptocurrencies from thousands of
addresses—is a calculated attempt to obscure the origins of their ill-gotten cryptocurrencies while offramping into fiat.
Why DeFi? DeFi platforms like DEXs provide liquidity for a wide range of ERC-20 tokens
and altcoins that may not otherwise be convertible into cash. When DPRK swaps these
coins for ETH or BTC they become much more liquid, and a larger variety of mixers and
HIGH-RISK JURISDICTIONS & SANCTIONS NORTH KOREA

THE 2022 CRYPTO CRIME REPORT

115

exchanges become usable. What’s more, DeFi platforms don’t take custody of user
funds and many do not collect know-your-customer (KYC) information, meaning that
cybercriminals can use these platforms without having their assets frozen or their
identities exposed.

DPRK’s stolen fund stockpile: $170 million worth of old, unlaundered
cryptocurrency holdings
Chainalysis has identified $170 million in current balances—representing the stolen funds
of 49 separate hacks spanning from 2017 to 2021—that are controlled by North Korea but
have yet to be laundered through services. The ten largest balances by dollar value are
listed below.
North Korea’s largest unlaundered cryptocurrency holdings by hack
$60M

$40M

$20M

$0
Hack A Hack B Hack C Hack D Hack E Hack F Hack G Hack H Hack I Hack J

Of DPRK’s total holdings, roughly $35 million came from attacks in 2020 and 2021. By
contrast, more than $55 million came from attacks carried out in 2016—meaning that
DPRK has massive unlaundered balances as much as six years old.

HIGH-RISK JURISDICTIONS & SANCTIONS NORTH KOREA

THE 2022 CRYPTO CRIME REPORT

116

Total balances held by North Korean actors by date of attack | 2016–2021
$60M

$40M

$20M

$0
2016

2017

2018

2019

2020

2021

This suggests that DPRK-linked hackers aren’t always quick to move stolen cryptocurrencies through the laundering process. It’s unclear why the hackers would still be sitting on
these funds, but it could be that they are hoping law enforcement interest in the cases
will die down, so they can cash out without being watched.
Whatever the reason may be, the length of time that DPRK is willing to hold on to these
funds is illuminating, because it suggests a careful plan, not a desperate and hasty one.

Coinswap, mix, consolidate, cash out: How North Korea-linked
hackers laundered $91 million after an exchange hack
In August, a cryptocurrency exchange announced that an unauthorized user had gained
access to some of the wallets it managed. The night before, 67 different ERC-20 tokens,
along with large quantities of Ether and Bitcoin, had been moved from these wallets to
addresses controlled by a party working on behalf of DPRK.
The attacker then used decentralized protocols to swap the various ERC-20 tokens for
Ether. From there, they mixed the Ether, swapped the mixed Ether for Bitcoin, mixed
the Bitcoin, consolidated the mixed Bitcoin into new wallets, and then deposited the
funds into crypto-to-fiat exchanges based in Asia. As a result, approximately $91.35M in
cryptoassets was laundered.

HIGH-RISK JURISDICTIONS & SANCTIONS NORTH KOREA

THE 2022 CRYPTO CRIME REPORT

117

Below, we’ve visualized each stage of the laundering process in Chainalysis Reactor.

Stage 1: Stolen ERC-20 tokens swapped for Ether at DEXs:

Next, the newly acquired Ether was mixed, and then swapped again.

HIGH-RISK JURISDICTIONS & SANCTIONS NORTH KOREA

THE 2022 CRYPTO CRIME REPORT

118

Stage 2: Mixed Ether deposited at DEXs and CEXs to swap for Bitcoin

HIGH-RISK JURISDICTIONS & SANCTIONS NORTH KOREA

THE 2022 CRYPTO CRIME REPORT

119

Stage 3: Movement of stolen funds after being swapped for BTC

At the end of this process, the attackers move the Bitcoin to centralized, primarily
Asia-based exchanges, where it’s likely swapped for a fiat currency like China’s Renminbi,
allowing them to finally access the cash gained from the hack.

DPRK: An advanced persistent threat to the cryptocurrency industry
These behaviors, put together, paint a portrait of a nation that supports cryptocurrency-enabled crime on a massive scale. Systematic and sophisticated, North Korea’s
government—be it through the Lazarus Group or its other criminal syndicates—has
cemented itself as an advanced persistent threat to the cryptocurrency industry in 2021.
Nonetheless, the inherent transparency of many cryptocurrencies presents a way forward.
With blockchain analysis tools, compliance teams, criminal investigators, and hack
victims can follow the movement of stolen funds, jump on opportunities to freeze or seize
assets, and hold bad actors accountable for their crimes.

HIGH-RISK JURISDICTIONS & SANCTIONS NORTH KOREA

THE 2022 CRYPTO CRIME REPORT 120

High-risk Jurisdictions
& Sanctions
Russia

THE 2022 CRYPTO CRIME REPORT

121

Russian Cybercriminals Drive Significant Ransomware
and Cryptocurrency-based Money Laundering Activity
Russia is a leading country in cryptocurrency adoption, placing 18th overall on our
Global Crypto Adoption Index. But the story of Russia’s cryptocurrency usage isn’t entirely
positive. 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.
In this section, we’ll delve into two intertwined areas of Russia’s crypto crime ecosystem
that, together, have serious implications for cybersecurity, compliance, and national
security: ransomware and money laundering.

Russian cybercriminals set the pace for ransomware
Russia has long been home to some of the most skilled hackers in the world. According to
cybersecurity investigators like Brian Krebs, this is largely due to the country’s excellence
in computer science education, combined with low economic prospects even for those
who are skilled in the field. Given this background, it may not be surprising that Russia
leads the way in ransomware. But the degree to which Russia-based ransomware strains
dominate is quite shocking.
Before we dive into the data, a quick explainer — we generally tie specific ransomware
strains to Russian cybercriminals based on one of three criteria:
• Evil Corp. Evil Corp is a Russia-based cybercriminal organization that has been
prolific in ransomware, and whose leadership is believed to have ties to the
Russian government.
• Avoids CIS countries. The Commonwealth of Independent States (CIS) is an
intergovernmental organization of Russian-speaking, former Soviet countries.
Many ransomware strains contain code that prevents the encryption of files if
it detects the victim’s operating system is located in a CIS country. In other
cases, ransomware operators have even given over decryptors to return file access
after learning they inadvertently targeted a Russian organization. We can
attribute CIS-avoiding strains to Russian cybercriminals, though with a lesser
degree of confidence, as some of them may be based in other CIS countries.
• Other connections: language, affiliate location, etc. There are several other
ransomware characteristics that can indicate a strain is likely based in Russia.
Examples include ransomware strains that share documents and announcements
HIGH-RISK JURISDICTIONS & SANCTIONS RUSSIA

THE 2022 CRYPTO CRIME REPORT

122

in the Russian language, or whose affiliates are believed to be located in Russia
with a high degree of confidence.
Using those three criteria, we show on the pie chart below the share of total ransomware
revenue that went to strains affiliated with Russian organizations in 2021.
Share of 2021 ransomware revenue taken by Russia-affiliated strains | 2021

No indication of Russian connection
27.4%

CIS-avoiding
26.4%

EvilCorp
9.9%

Other Russian connection
36.4%

Overall, roughly 74% of ransomware revenue in 2021 — over $400 million worth of
cryptocurrency — went to strains we can say are highly likely to be affiliated with Russia
in some way.
Blockchain analysis combined with web traffic data also tells us that after ransomware
attacks take place, most of the extorted funds are laundered through services primarily
catering to Russian users.

HIGH-RISK JURISDICTIONS & SANCTIONS RUSSIA

THE 2022 CRYPTO CRIME REPORT

123

Estimation of regional exposure to ransomware funds | 2021
Index
$40M
$35M
$30M
$25M
$20M
$15M
$10M

$5M

An estimated 13% of funds sent from ransomware addresses to services went to users
estimated to be in Russia, more than any other region. That brings us to another point: A
huge amount of cryptocurrency-based money laundering, not just of ransomware funds
but of funds associated with other forms of cybercrime as well, goes through services
with substantial operations in Russia.

Cryptocurrency-based money laundering in Moscow City
Russia is home to several cryptocurrency businesses that have processed substantial
transaction volume from illicit addresses. In order to illustrate the scope of the problem,
we thought it would be interesting to zoom in on businesses headquartered or with a
significant presence in the capital’s financial district, Moscow City. Chainalysis is tracking
several dozen cryptocurrency businesses operating in Moscow City alone that facilitate
significant amounts of money laundering.

HIGH-RISK JURISDICTIONS & SANCTIONS RUSSIA

THE 2022 CRYPTO CRIME REPORT

124

Total value received by Moscow City cryptocurrency buinesses | 2019–2021
Legitimate and non-risky

Illicit and risky

$1.25B
$1B
$750M
$500M
$250M

4
Q
21

2
20

21
20

Q
21
20

4
Q
20

2
20

1
20

4
20

3
20

Q
19
20

Note: The word “risky” here defines addresses connected to entities that, while not necessarily inherently
criminal, are frequently linked to criminal activity, such as high-risk exchanges and mixers.

Collectively, these businesses receive hundreds of millions of dollars’ worth of cryptocurrency per quarter, with totals peaking at nearly $1.2 billion in the second quarter
of 2021. In any given quarter, the illicit and risky addresses account for between 29%
and 48% of all funds received by Moscow City cryptocurrency businesses. In total,
across the three-year period studied, these businesses have received nearly $700 million
worth of cryptocurrency from addresses associated with explicitly criminal activity,
which represents 13% of all value they’ve received in that time. Where do these illicit
funds come from?

HIGH-RISK JURISDICTIONS & SANCTIONS RUSSIA

THE 2022 CRYPTO CRIME REPORT

125

Illicit cryptocurrency moving to Moscow cryptocurrency businesses by crime type
| 2019–2021
Ransomware
5.5%
Cybercriminal administrator
1.7%
Fraud shop
4.0%

Scam
45.6%

Darknet market
43.1%

Note: “Cybercriminal administrator” refers to addresses that have been attributed to individuals connected
to a cybercriminal organization, such as a darknet market.

Scams at $313 million and darknet markets at $296 million make up the vast majority of
illicit cryptocurrency sent to the Moscow City cryptocurrency businesses we track between
2019 and 2021. Ransomware is third at $38 million.
Overall, the Moscow City cryptocurrency businesses we track vary greatly in the role
that money laundering plays in their overall business. Some of them are big enough that
despite receiving millions of dollars’ worth of funds from illicit addresses, those funds
only represent 10% or less of all cryptocurrency they receive. Those instances could be
attributed to the business’s lack of knowledge, rather than purposeful criminal activity.
But for other Moscow City cryptocurrency businesses, illicit funds make up as much as
30% or more of all cryptocurrency received, which suggests those businesses may be
making a concerted effort to serve a cybercriminal clientele.
Interestingly, over half of the businesses described above have reportedly operated in the
same Moscow City skyscraper: Federation Tower.

HIGH-RISK JURISDICTIONS & SANCTIONS RUSSIA

THE 2022 CRYPTO CRIME REPORT

126

Credit: Mariano Mantel

Federation Tower, a two skyscraper complex in the heart of Moscow City, is one of the
most prestigious buildings in all of Russia, with several prominent businesses headquartered there and residential units going for upwards of $36 million. However, as outlets
like Bloomberg and the New York Times have reported, Federation Tower is home to
several cryptocurrency businesses that have facilitated extensive money laundering,
accepting funds from addresses involved in various forms of cryptocurrency-based crime
— especially scams, darknet markets, and ransomware.
Illicit funds moving to Federation Tower cryptocurrency businesses | 2019–2021
Stolen funds

Scam

Sanctions

Ransomware

Cybercriminal administrator

Fraud shop

Darknet market

$60M

$40M

$20M

$0
2019Q1

2019Q2

2019Q3

2019Q4

2020Q1

2020Q2

HIGH-RISK JURISDICTIONS & SANCTIONS RUSSIA

2020Q3

2020Q4

2021Q1

2021Q2

2021Q3

2021Q4

THE 2022 CRYPTO CRIME REPORT

127

Nothing is more emblematic of the growth of Russia’s crypto crime ecosystem, and of
cybercriminals’ ability to operate with apparent impunity, than the presence of so many
cryptocurrency businesses linked to money laundering in one of the capital city’s most
notable landmarks.
Below, we highlight some of the cryptocurrency businesses with a presence in Moscow
City that have facilitated the most money laundering or are otherwise notable:
Analysis of a selection of Moscow City cryptocurrency businesses facilitating moneylaundering | 2019–2021

Name

Garantex

Eggchange

Cashbank

Buy-bitcoin

Tetchange

Total
cryptocurrency
value received
(2019–2021)

$2,114,431,000

$34,081,220

$45,400,600

$41,604,170

$21,903,700

Illicit and risky
cryptocurrency
value received
(2019–2021)

$645,223,700

$3,705,827

$180,119

$11,374,910

$4,621,440

HIGH-RISK JURISDICTIONS & SANCTIONS RUSSIA

Share of all value
received coming
from illicit and
risky sources
(2019–2021)

Notes

31%

Has received over $10 million
from ransomware strains
including NetWalker, Phoenix
Cryptolocker, and Conti.

11%

Has received hundreds of
thousands of dollars’ worth of
cryptocurrency from darknet
markets, scams, fraud shops,
and ransomware operators.
Founder Denis Dubnikov was
arrested for his alleged role
in helping Ryuk ransomware
operators launder funds.

0.4%

While Cashbank’s detected
money laundering activity
is relatively low in volume,
it advertises on forums
frequented by illicit actors and
criminals.

27%

Has received $2.1 million from
darknet markets, $400,000 in
stolen funds, and $400,000
from ransomware attackers.

21%

Has received over $1 million
from darknet markets and
$600,000 from ransomware
attackers.

THE 2022 CRYPTO CRIME REPORT

128

Bitzlato

Suex

$2,000,077,000

$426,189,500

$966,254,800

$158,856,100

48%

Has received $206 million from
darknet markets, $224.5 million
from scams, and $9 million
from ransomware attackers.

37%

Has received $24 million
from scams, $20 million from
darknet markets, and $12
million from ransomware.
Sanctioned by OFAC in 2021.

What’s next for crypto crime in Russia?
Looking ahead, change may be on the way for Russia’s cryptocurrency ecosystem,
especially as it relates to crime. In January 2022, Russian police arrested 14 affiliates of
the REvil ransomware organization, marking one of the only times the local authorities
have taken action against ransomware attackers operating within the country. However,
analysts have speculated that the arrests were an act of diplomacy meant to cool
tensions with the United States over Russia’s troop buildup on Ukraine’s borders, and
may not indicate true commitment to fighting ransomware. At the same time, cryptocurrency’s regulatory status in Russia appears to be in flux, with President Vladimir
Putin defending cryptocurrency miners at the same time the country’s national bank
recommends an all-out ban on all cryptocurrency activity.
Regardless of what the future holds, it’s important to understand where things stand now:
Russian cybercriminal organizations are some of the biggest perpetrators of cryptocurrency-based crime — especially ransomware — and local cryptocurrency businesses
provide money laundering services that enable this activity. 2021 saw positive momentum
against this issue, from the seizure of funds from ransomware organization DarkSide to the
sanctioning of Suex and Chatex. Chainalysis looks forward to working with law enforcement, regulators, and compliance professionals in 2022 to keep that momentum going.

HIGH-RISK JURISDICTIONS & SANCTIONS RUSSIA

THE 2022 CRYPTO CRIME REPORT

129

Together, these six Moscow City crypto services received
$1.8 billion from addresses associated with illicit and risky activity.

THE 2022 CRYPTO CRIME REPORT

130

High-risk Jurisdictions
& Sanctions
Iran

THE 2022 CRYPTO CRIME REPORT

131

Bitcoin Mining Fuels Iran’s Billion-Dollar
Sanctions Evasions
Iran faces some of the most extensive U.S. sanctions of any country. Per the United
States Treasury’s Office of Foreign Assets Control (OFAC), U.S. businesses and individuals
are effectively banned from transacting with Iranian businesses, including its biggest
financial institutions and central bank. Some in the Iranian government have called for
the country to use cryptocurrency to circumvent these sanctions, and Bitcoin mining may
provide the perfect opportunity to do so. As one of the world’s largest energy producers,
Iran has the low-cost electricity needed to mine cryptocurrencies like Bitcoin cheaply,
providing an injection of monetary value that sanctions can’t stop.
Our research indicates Iranian Bitcoin mining is well underway at a surprisingly large
scale. From 2015 to 2021, we found that Bitcoin mining funneled more than $186 million
into Iranian services, most of it within the past year.
Net flows to and from Iranian services | 2015–2021
Mainstream
exchanges
Mixing
Gambling platform
Other
Illicit
P2P Exchange
High-risk exchange
DeFi
Mining
-$100M

$100M

$200M

Iranian state actors are well aware of the opportunity. In 2019, the Iranian government
created a licensing regime for cryptocurrency mining. And in March 2021, a think tank tied
to the President’s office released a report stressing its benefits.
But the costs have extended beyond just electricity. The Iranian government has had to
ban Bitcoin mining twice this year due to frequent blackouts, many of which Iran’s state

HIGH-RISK JURISDICTIONS & SANCTIONS IRAN

THE 2022 CRYPTO CRIME REPORT

132

power agency has blamed on unlicensed Bitcoin mining. And unlicensed Bitcoin miners,
for their part, allegedly account for “some 85%” of all activity in the country, per the
Iranian president.
It has also opened up a new avenue of risk for cryptocurrency businesses. In theory, U.S.
businesses could face penalties or even criminal prosecution if found in violation of OFAC
sanctions, which prohibit U.S. persons or companies from servicing financial accounts
belonging to Iranian persons or companies. That being said, businesses can monitor for
exposure to Iranian miners to reduce this risk considerably.
It’s also important to note that a nexus to sanctions is more attenuated at the transaction/mining fee level. If a U.S. business were to engage in a transaction and the fees paid
from said transaction were received by an Iranian miner, the payer and payee would have
had no say in who could receive these fees—the receiver of which is determined automatically by Bitcoin’s proof-of-work protocol. To date, sanctions risk appears most prominent
when a U.S. business transacts directly with the miner themselves.
Many exchanges operating in jurisdictions without active sanctions, however, continue to
provide financial services to Iranian businesses. In fact, in 2021, services outside of Iran
received $1.16 billion from Iranian services—more than double the value received last year.
Total cryptocurrency value leaving Iranian services by destination | 2018–2021
Other

Exchanges

$1.25B

$1B

$750M

$500M

$250M

$0
2018

2019

2020

2021

This transfer of funds from mining pools to Iranian services to services in the wider
cryptocurrency ecosystem is a key corridor through which Iran evades sanctions. In the
next section, we illustrate the most common paths to this end.
HIGH-RISK JURISDICTIONS & SANCTIONS IRAN

THE 2022 CRYPTO CRIME REPORT

133

From mining pools to mainstream exchanges: Iran’s sanctions
evasion visualized
We can identify several of the services enabling Iran’s sanctions evasion with blockchain
analysis. Using Chainalysis Reactor, we visualize below the flow of funds from three
mining pools to one mainstream exchange by way of Nobitex.ir, Iran’s largest
cryptocurrency exchange.

These same pools have similar degrees of exposure to Iran’s second largest exchange,
Wallex.ir.

HIGH-RISK JURISDICTIONS & SANCTIONS IRAN

THE 2022 CRYPTO CRIME REPORT

134

And similar degrees of exposure to Iran’s third largest exchange, Excoino.com.

In spite of these large outflows, each mining pool above has a terms of service
agreement explicitly disallowing Iranian users. On one of these mining pools’ websites,
the service states that by using the pool, the user guarantees that he/she is not subject
to any economic sanctions, nor is he/she a citizen of Iran. On the two others, users are
required to affirm that they are not a resident of Iran or any other jurisdiction where the
services provided are restricted.
However, each mining pool above continues to send funds to Iranian services as of this
report’s release.
To get the complete picture of Iranian services’ relationship with the mining world, we
also measured the daily flows from all mining pools to all Iranian services in 2021—
including those that don’t mine Bitcoin.
We found that from January 1st to December 31st, outflows from mining pools to Iranian
services averaged about $343,000 worth of cryptocurrency per day, approximately 80% of
which was Bitcoin.

HIGH-RISK JURISDICTIONS & SANCTIONS IRAN

THE 2022 CRYPTO CRIME REPORT

135

Daily cryptocurrency value received by Iranian services from mining pools | 2021
$3M

$2M

1/1/2021
1/8/2021
1/15/2021
1/22/2021
1/29/2021
2/5/2021
2/12/2021
2/19/2021
2/26/2021
3/5/2021
3/12/2021
3/19/2021
3/26/2021
4/2/2021
4/9/2021
4/16/2021
4/23/2021
4/30/2021
5/7/2021
5/14/2021
5/21/2021
5/28/2021
6/4/2021
6/11/2021
6/18/2021
6/25/2021
7/2/2021
7/9/2021
7/16/2021
7/23/2021
7/30/2021
8/6/2021
8/13/2021
8/20/2021
8/27/2021
9/3/2021
9/10/2021
9/17/2021
9/24/2021
10/1/2021
10/8/2021
10/15/2021
10/22/2021
10/29/2021
11/5/2021
11/12/2021
11/19/2021
11/26/2021
12/3/2021
12/10/2021
12/17/2021
12/24/2021
12/31/2021

$1M

Interpreting these findings
Since our model captures only those mining pools with sending exposure to Iranian
services in particular, $186 million likely underestimates Iran’s total Bitcoin mining
revenue from 2015 to 2021. In fact, other mining pools may support much more Iranian
mining activity than the three pools we identify here—and given Iran’s estimated 3.11%
monthly share of the global hashrate, this is probably true. As such, this estimate should
be considered a lower bound.

The implications for government agencies, financial institutions, and
cryptocurrency businesses
With Iran embracing cryptocurrency, we advise interested government agencies to
watch this situation closely. To avoid the risk of sanctions violations, we encourage U.S.
cryptocurrency businesses and financial institutions to do the same. Businesses can
automatically monitor for transactional exposure to Iranian entities with Chainalysis KYT,
while government agencies can identify these transactions’ counterparties with Reactor.

HIGH-RISK JURISDICTIONS & SANCTIONS IRAN

THE 2022 CRYPTO CRIME REPORT

136

Thanks for reading the
2022 Crypto Crime Report
Chainalysis Authors
Kim Grauer
Director of Research
Will Kueshner
Content Marketer
Henry Updegrave
Senior Content Marketing Manager

This material is for informational purposes only, and is not intended to provide legal, tax, financial, or
investment advice. Recipients should consult their own advisors before making investment decisions.
This report contains links to third-party sites that are not under the control of Chainalysis, Inc. or its
affiliates (collectively “Chainalysis”). Access to such information does not imply association with,
endorsement of, approval of, or recommendation by Chainalysis of the site or its operators, and C
hainalysis is not responsible for the products, services, or other content hosted therein.
Chainalysis does not guarantee or warrant the accuracy, completeness, timeliness, suitability or validity
of the information in this report and will not be responsible for any claim attributable to errors, omissions,
or other inaccuracies of any part of such material.

Check out more original
Chainalysis research
Chainalysis Reports
Cryptocurrency Exchanges in 2021:
A Competitive Analysis
The 2021 NFT Market Report: Everything
You Need to Know About the NFT Market
and Its Most Successful Collectors
VIEW ALL REPORTS

Chainalysis Insights
Data-driven content on cryptocurrency markets,
regulation and developments
VISIT THE BLOG

Building trust
in blockchains
About Chainalysis
Chainalysis is the blockchain analysis company providing data and analysis to
government agencies, exchanges, and financial institutions across 40 countries.
Our investigation and compliance tools, education, and support create transparency
across blockchains so our customers can engage confidently with cryptocurrency.
Backed by Accel, Benchmark, and other leading names in venture capital, Chainalysis
builds trust in blockchains. For more information, visit www.chainalysis.com.

Tags : Crime Report

Cookie	Duration	Description
cookielawinfo-checkbox-analytics	11 months	This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional	11 months	The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary	11 months	This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others	11 months	This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance	11 months	This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy	11 months	The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.

BiZZBoard | Blockchain Education Network

The 2022 Crypto Crime Report✭

The 2022 Crypto Crime Report

Related Topics

Ireland Anti-Money Laundering

Regulation, Supervision, Oversight Crypto Ass

Future of Autonomous Invisible Transactions

Responding to the New Reality in Banking

DAO The Evolution of Organization
[real3dflipbook pdf="https://www.bizzboard.com/wp-conte...

What’s New

Economic & Capital Markets Outlook 2023

WEF Global Risks Report 2023

1000+ Ultimate ChatGPT Prompts✭

Stablecoin Trust Act of 2022

The New Skills in Financial Services

Blockchain for Digital Government

Blockchain, Crypto & Web3 Predictions

A Year In Review 2022 & Trends For 2023✭

PitchBook NVCA Venture Monitor Q3

Economic Resilience During COVID-19

BiZZBoard | Blockchain Education Network

The 2022 Crypto Crime Report✭

The 2022 Crypto Crime Report

Related Topics

Ireland Anti-Money Laundering

Regulation, Supervision, Oversight Crypto Ass

Future of Autonomous Invisible Transactions

Responding to the New Reality in Banking

DAO The Evolution of Organization [real3dflipbook pdf="https://www.bizzboard.com/wp-conte...

What’s New

Economic & Capital Markets Outlook 2023

WEF Global Risks Report 2023

1000+ Ultimate ChatGPT Prompts✭

Stablecoin Trust Act of 2022

The New Skills in Financial Services

Blockchain for Digital Government

Blockchain, Crypto & Web3 Predictions

A Year In Review 2022 & Trends For 2023✭

PitchBook NVCA Venture Monitor Q3

Economic Resilience During COVID-19

DAO The Evolution of Organization
[real3dflipbook pdf="https://www.bizzboard.com/wp-conte...