A new report unveils that 1% of DEX transactions are linked with criminal activities. Chainalysis’s chief scientist wrote that $34 million were transacted by illegal means.
Total Volume via DEXs: $144.3 Billion
In 2020, transactions processed through decentralized exchanges (DEXs) represented a total of $144.3 billion. Prominent analytics firm Chainalysis found out that $34 million out of $144.3 billion was conducted via criminal actors. It is just a small fraction if we compare it with total transaction volume.
Jacob Illum, the chief scientist at Chainalysis, explained that the criminal activity around DEX would likely increase in 2021. Criminals prefer smart contract channels to launder money as there is the less human role in the decentralized ecosystem. Lack of human check and balance in DEX transactions will provide a space to criminal actors.
It pops out the need for some central authority to monitor the whole activity on the platforms. But crypto supporters always support decentralization and zero outside manipulation.
What’s more, the dark markets are also transitioning towards decentralization. Illegal actors are taking benefits of the decentralization and are busy laundering money. So, there are also disadvantages of decentralization besides advantages.
It is an exciting fact that criminal activity reduced to a great extent in 2020. According to Chainalysis’s estimation, over $21 billion was transacted illegally in 2019. But in 2020, the figure reduced to only $10 billion. The primary reason for the decrease is a surge in “overall economic activity” in the given period.
Last year, the PlusToken Ponzi Scheme was the biggest scandal that scammed more than $2.5 billion from investors. However, the Chinese authorities started to crack down on the founding members of the scammed project. The founding scammers used mixers to launder money out of the country.
Ransomware-based cybercrimes increased enormously in 2020. Chainalysis’s report also highlighted that ransomware activities have surged by 311% since 2019. The primary reason is that remote working of tech organizations provided an excellent opportunity to cybercriminals. Furthermore, ransomware-based happenings are underreported, and the figure could be large.
Scams have dropped enormously in 2020 that is considered negligible as compared to 2019. In 2019, scams made up 54% ($2.6 billion) of entire crypto criminal activities. Darknet activities linked with cryptocurrency are the second-biggest name in the crime list of 2020.