Funds received by the Russian exchange Garantex, which was sanctioned by the U.S. Treasury Department in April, accounted for “much of 2022’s illicit volume”, Chainalysis said, adding that most of that activity is “likely Russian users using a Russian exchange.” A spokesperson for Chainalysis said wallets are tagged as “illicit” if they are part of a sanctioned entity. Garantex did not immediately respond to an emailed request for comment. The United States also imposed sanctions last year on cryptocurrency mixing services Blender and Tornado Cash, which it said were being used by hackers, including from North Korea, to launder billions of dollars worth of proceeds from their cyber crimes. The volume of stolen crypto funds rose 7% last year, but other illicit crypto transactions including those related to scams, ransomware, terrorism financing and human trafficking, saw volumes fall.

“The market downturn may be one reason for this,” Chainalysis said. “We’ve found in the past that crypto scams, for instance, take in less revenue during bear markets.” Chainalysis said its $20.1 billion estimate only includes activity recorded on blockchain, and excludes “off-chain” crime such as fraudulent accounting by crypto firms. The figure also excludes when cryptocurrencies are the proceeds of non-crypto-related crimes, such as when cryptocurrency is used as a means of payment in drug trafficking, Chainalysis said. “We have to stress that this is a lower bound estimate – our measure of illicit transaction volume is sure to grow over time,” the report said, noting that the figure for 2021 was revised to $18 billion from $14 billion as more scams were discovered.  Reuters