Understanding Criminal Whales
In the vast ocean of cryptocurrency, not all whales are benevolent. The term “criminal whales” refers to a shady class of holders swimming in the depths of wallets worth over $1 million, with a hefty chunk of their loot sourced from the murky waters of illicit activities. According to Chainalysis, there are a staggering 4,068 of these whales, controlling $25 billion of crypto. That’s not just a little pocket change; that’s a treasure trove!
What’s in the Criminal Wallet?
The term is ominously catchy—criminal whales derive a significant portion of their funds from dubious origins. Chainalysis defines them as wallets that have over 10% of their funds tied to activities like scams, fraud, and good old-fashioned malware. Fancy that! Talk about a risky investment strategy!
Categories of Criminal Whales
- 10%-25% illicit funds: 1,374 wallets fall into this category.
- 90%-100% illicit funds: 1,361 are swimming completely out of the clean waters.
- 25%-90% illicit funds: and remaining 1,333 are casually dipping their toes in the dark side.
The Heavyweights of Crime
It turns out that the pirates of the crypto seas are more than just traditional thieves. While stolen funds reign supreme in this dark landscape, it’s the darknet markets that have become the primary source of illicit funds fueling criminal wallets, with scams holding a close second and good ol’ theft trailing behind.
Scamming: The Crypto Epidemic
The Chainalysis report highlights an eye-watering trend: criminal addresses raked in over $14 billion in 2021, a 79% increase from the year before. Yes, you read that right! A whopping $7.8 billion came from scams, which is a surge of 82% from 2020. Notably, DeFi rug pulls were major culprits, with $2.8 billion snatched away!
Rug Pulls and Their Tidal Waves
If you think rug pulls sound dramatic, you’re spot-on! These scams have become a favorite among nefarious characters because, let’s face it, they’re like the perfect heist. In 2021, 90% of rug pull losses originated from one infamous centralized exchange, Thodex, whose CEO enacted a magician-like vanishing act (poof!) right after halting withdrawals.
Progress in Fighting Crypto Crime
Fortunately, while it may seem that the criminal element is overwhelming, the tide is turning. Law enforcement is becoming more adept at chasing down these shady undersea dealings. In 2021, authorities took significant steps, with the CFTC chasing down investment scams and even the FBI taking down prolific ransomware gangs.
With total transaction volume in USD at around $15.8 trillion last year, the portion attributed to illicit addresses is only a miniscule 0.15%, a drop from 0.34% a year earlier. Crime may still exist in the crypto space, but it’s fast becoming a smaller fish in a massive pond.
+ There are no comments
Add yours