Report: Bitcoin accounted for just 19% of illegal crypto activity in 2022

Bitcoin’s share of the illicit crypto economy fell from 97% in 2016 to 19% in 2022, according to a study by TRM Labs.

Analysts say that last year’s bear market did not reduce the dollar value of cryptocurrency-related criminal activity:

• No less than $7.8 billion was invested in Ponzi schemes and financial pyramids;
• $1.5 billion comprised the turnover of darknet marketplaces specializing in drug trafficking;
• losses from hacks and exploits reached $3.7 billion (the largest annual total on record).

One possible reason for such stability is a sharp shift away from Bitcoin’s dominance toward a new multi-network reality that has spawned additional threats, the researchers noted.

In 2022 attacks on cross-chain bridges alone generated $2 billion for attackers, according to the experts.

Criminals are increasingly relying on moving across networks or moving funds across different blockchains as part of their money-laundering strategies to obscure the source and destination of illicit proceeds, the analysts said.

In 2016, two-thirds of losses from hacks were attributable to the first cryptocurrency; six years on, the Ethereum ecosystem (68%) and Binance Smart Chain (19%) dominate the figures.

At the start of the period, Bitcoin was the only cryptocurrency used to fund terrorism. By 2022, it was almost completely displaced by assets on Tron (92%). The stablecoin USDT from Tether is predominantly used.

According to the TRM Labs study, of the $1.5 billion spent on illicit online drug-trading platforms last year, 80% went to Russian-language sites. Most of them supported only Bitcoin, with no option to opt for privacy coins. Western darknet marketplaces largely offered payments in Monero (XMR).

Analysts recorded in 2022 cases of using the first cryptocurrency in corruption (cases involving FTX founder Sam Bankman-Fried and Chinese intelligence officers) and for paying for contract killings (in the United States and Italy).

In June, the Nikulinsky District Court of Moscow seized 1,032.1 BTC from the former head of the investigative department for the Tverskoy district, Marat Tambiev, who was accused of taking bribes from members of the hacker group Infraud Organization.