The crypto space saw unprecedented growth last year, and unfortunately, this led to a heavy surge in crypto-related crime. According to a new study conducted by blockchain analysis firm Chainalysis, illicit activity in the crypto space saw approximately $14 billion in crypto go to scam or fraudulent addresses.

Chainalysis: The Amount of Crime Nearly Doubled in 2021

Compare this number with the $7.8 billion that was stolen in the year 2020. From one year to the next, the fraud numbers have expanded by roughly 80 percent. At the same time, however, the overall transactions occurring in the crypto space throughout 2021 expanded by more than 550 percent. Overall, as much as $15.8 trillion in crypto was traded in 2021.

Kim Grauer – head of research at Chainalysis – explained in an interview:

The amount of legitimate activity grew much faster than the amount of criminal activity.

This is an awfully good sign in that it suggests the crypto space is growing normally. While fraud and crime does exist, the amount of legit activity occurring within the space clearly outweighs all the illegal occurrences. This suggests that the space is becoming far more mainstream and legitimate as retailers and institutions alike flock to its offerings.

At the same time, it’s not like the fraud and crime occurring within the industry can be ignored, nor should it be. If it’s tossed to the side, there’s a good chance these criminals will continue to get away with everything they’re doing, and we may not see an end to fraud within this growing financial arena.

As a result of the threats, more regulators are looking to have influence over the space, and we can potentially expect governments to get more involved in crypto as the space gets larger. Among the biggest crimes witnessed by Chainalysis in the year 2021 was ransomware and NFT-related scams.

In addition, representatives say they saw many new coins established within set periods and rise to exorbitant prices within no time at all. Right when it seemed like things were going to reach a new peak, executives would shut the coins down and make off with all the funds that investors had placed into the projects. It’s a classic snatch-and-flee scheme that’s all too common in the world of crypto.

There has also been a heavy rise in fraudulent crypto exchanges, a notable example being Thodex in Istanbul, Turkey. The company fled the nation unexpectedly and left approximately 400,000 clients unable to access their funds.

Defi Is a Big Target

Lastly, Grauer explained that more fraud is occurring amongst defi platforms given their code is open-source and accessible to anyone. Grauer says:

A lot of the code that is writing these protocols is public and open-sourced, so anyone can go over them and look for bugs in the code that they can then exploit.

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