4% of crypto whales are criminals, and they hold $25B among them: Chainalysis

4% of crypto whales are criminals, and they hold $25B among them: Chainalysis

The report defines criminal whales as private wallets that hold more than $1 million worth of crypto, with more than 10% of their balances coming from illicit addresses. According to Chainalysis, there are 4,068 criminal whales (approximately 4% of all whales) hoarding more than $25 billion in cryptocurrencies. Criminal whales, according to the blockchain analytics firm, are any private wallet that owns more than $1 million in cryptocurrency and receives more than 10% of its funds from illicit addresses linked to scams, fraud, and malware. The information comes from the “Crypto Crime Report’s” “Criminal Balances” section, which looks at criminal activities on the blockchain between 2021 and early 2022. Ransomware, malware, darknet markets, and nonfungible token-related criminality are among the themes covered in the comprehensive paper. “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,” the report reads. The data shows that 1,374 whales have received between 10% and 25% of their balance from nefarious sources, while 1,361 had between 90% and 100%. Those with balances between 25% and 90% of illicit funds totaled 1,333 criminal whales.

Percentage of whale balance via illicit addresses: Chainalysis

“While stolen monies account for the majority of criminal balances, darknet markets are the leading source of illicit funds supplied to criminal whales, with scams coming in second and stolen funds coming in third,” according to the report.

Illicit transaction activity

In terms of illicit transaction activity, the report reveals that criminal addresses received more than $14 billion in 2021, marking a whopping 79% increase compared to the $7.8 million seen in 2020.

Value recieved via type of crypto crime: Chainalysis

The lion’s share of that $14-billion figure last year was attributed to scamming, which increased by 82% year-over-year to account for $7.8 billion. Decentralized Finance (DeFi) rug pulls, in particular, were highlighted as a key source of scamming at $2.8 billion: “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.” Theft soared by 516 percent, accounting for $3.2 billion in illegal transactions, with the DeFi sector once again becoming a source of concern. On the plus side, according to Chainalysis, total transaction volume in US dollars in 2021 was roughly $15.8 trillion, with unlawful addresses accounting for only 0.15 percent of that amount, down from 0.34 percent the year before. “Crime is becoming less and less of a factor in the cryptocurrency economy. The ability of law enforcement to tackle cryptocurrency-based criminality is also changing. “Throughout 2021, we’ve seen multiple examples of this, from the CFTC filing charges against several investment frauds to the FBI’s takedown of the widespread REvil ransomware strain to OFAC’s sanctioning of Suex and Chatex,” according to the paper.