Over 4,000 ‘Criminal Whales’ Hold $25 Billion Worth of Crypto: Report

Time Stamp: February 16, 2022 3:40 PM
Source Node: 1610639

New Chainalysis data has found that 4,068 “criminal whales” hold $25 billion worth of cryptocurrency. The firm defines criminal crypto whales as any private wallet that holds $1 million or more of cryptocurrency and has received 10% or more of those funds through illicit addresses. (In other words, not all of that $25 billion is illicit.)

The data has been released in a preview of Chainalysis’ upcoming 2022 Crypto Crime Report, and follows similar, recent reports on ransomware, NFT fraud, money laundering and malware. 

Two findings in this report take center stage: the rise in crypto balances that come from crime, and the reasons for that rise.

At the end of 2021, illicit balances—that is, funds that came from illicit sources—came in at $11 billion, up massively from $3 billion at the end of 2020.

That rise was thanks to the surge in cryptocurrency values in 2021, but also “a surge in the amount of hacks that occurred this year, which also contributed to the amount of funds held by hackers following a hacking event,” Kim Grauer, head of research at Chainalysis, told Decrypt.

Of the $11 billion in illicit balances at the end of 2021, stolen funds accounted for 93% or $9.8 billion. Darknet market funds are next at $448 million, followed by scams at $192 million, fraud shops at $66 million, and ransomware at $30 million, according to the report.

Of course, the seizure last week of $3.6 billion in Bitcoin from the 2016 Bitfinex hack means that the $11 billion in illicit balances at the end of 2021 is already far lower for the moment.

Criminal crypto whales in 2021

Other than the increase in criminal balances in 2021—and the degree to which stolen funds featured over and above other metrics—Chainalysis found that criminal balances also fluctuated throughout the year.

In July, they reached an all-time low of $6.6 billion; in October, they peaked at $14.8 billion. These figures, Chainalysis reports, reiterate the importance of cryptocurrency-related investigations taking place quickly. 

“The fluctuations are a reminder of the importance of speed in cryptocurrency investigations, as criminal funds that have been successfully traced on the blockchain can be liquidated quickly,” the analytics firm said. 

Of course, the opposite of this can be true as well. Heather Morgan and Ilya Lichtenstein—who both allegedly laundered Bitcoin stolen during the 2016 Bitfinex hack—weren’t arrested until earlier this month. 

At the time of the Bitfinex hack, the stolen Bitcoin in question was worth $71 million. By the time of the arrests, it was worth $3.6 billion. 

How many criminal crypto whales are there? 

The analysis also found that 3.7% of all cryptocurrency whales are criminal crypto whales. Mostly, these whales are sources from illicit funds originating on darknet markets. 

Other sources of revenue for these criminal whales include scams—which comes in second—and scams. 

Interestingly, Chainalysis also approximated the location of these criminal whales by timezone. The analytics firm found that the time zones that contained the most criminal whales covered large Russian cities like Moscow and St. Petersburg, as well as countries like South Africa, Iran, and Saudi Arabia. 

“The ability to efficiently track criminal whales and quantify their holdings from one public data set is a major difference between cryptocurrency-based crime and fiat-based crime,” Chainalysis added. 

“In fiat, the highest net worth criminals have murky networks of foreign banks and shell corporations to obfuscate their holdings. But in cryptocurrency, transactions are saved on the blockchain for all to see,” the firm concluded.

https://decrypt.co/92995/over-4000-criminal-whales-hold-25-billion-worth-crypto-report

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