Crypto Crime Report Unveils a Surge in Sanctions Violations Dominating Illicit Activities

tamir
Sun, 03 Mar 2024 08:43:33 +0000
Cybercrime, Cybercrime Data

The 2024 Crypto Crime Report by Chainalysis for the year 2024 highlights sanctions violations as the dominant form of crypto-related criminal activity, overshadowing other types of illicit transactions in the digital asset space. A staggering $14.9 billion out of $24.2 billion in illicit crypto transactions were linked to entities under sanctions, spotlighting the critical intersection of cryptocurrency and global regulatory violations.

This surge in sanctions-related crimes accounted for 61.5% of all illicit crypto transactions in the past year, marking a significant jump from the 43% recorded in 2022. The United States Office of Foreign Assets Control (OFAC) has played a pivotal role in this shift, more than doubling the number of entities listed on its crypto sanctions roster with 18 new sanctions targeting cryptocurrency addresses directly.

The entities embroiled in these nefarious activities span a broad spectrum, from individuals engaged in the global drug trade to cyber threat actors and international terrorist networks. Among these, the Russia-based exchange Garantex and the crypto mixer Tornado Cash have been identified as major contributors to the volume of transactions associated with sanctioned entities.

Garantex, in particular, has come under scrutiny for its alleged involvement in laundering operations on behalf of cybercriminals and ransomware attackers. Despite losing its crypto license in Estonia in February 2022 and being sanctioned by both OFAC and the UK’s Office of Financial Sanctions Implementation (OFSI), Garantex reportedly continues its operations unimpeded in Russia, a jurisdiction that does not enforce U.S. sanctions. This Russian-controlled entity is believed to launder a colossal €5 billion annually.

Tornado Cash’s story is one of resilience against regulatory clampdowns. Following its sanctioning by the US Treasury in August 2022, the platform saw an initial 93% drop in inflows. However, Chainalysis reports a notable resurgence in its activities, with Tornado Cash receiving $822 million worth of crypto post-sanction. Despite a reduction in overall transaction volume compared to its peak pre-sanctioning period, the upward trend in its usage since early 2023 signals a persistent challenge for regulators.

Interestingly, the report does not mention Binance, another significant entity previously implicated in money laundering activities related to bankruptcy avoidance. This omission comes despite Binance’s settlement with U.S. authorities in November 2023, which brought to light its role in such schemes.

The rallying of privacy advocates around Tornado Cash founder Roman Storm, following his arrest, underscores the complex debate surrounding privacy, regulation, and the use of cryptocurrency in illicit activities.

Despite the daunting figures associated with sanctions violations, the broader picture painted by Chainalysis suggests a decline in crypto crime overall. Illicit transaction volumes fell from $39.6 billion in 2022 to $24.2 billion, with such activities constituting a mere 0.34% of global cryptocurrency transactions. This decline, both in absolute terms and as a proportion of total crypto transactions, offers a silver lining amidst the ongoing battle against financial crime in the digital age.