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Crypto Crime Hit An All-Time High in 2021 As Adoption Increases

While crypto crime theft saw a nearly 80% year over year jump in volume, crypto adoption far outpaced the incidences of crime.
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As cryptocurrencies enjoyed a moment of inflection in 2021, crypto crime also had its day in the sun in a trend that could continue into 2022, according to a new report. 

Cryptocurrency-based crime hit an all-time high in 2021 as illicit addresses received $14 billion over the course of the year, according to a report from Chainanalysis, nearly double the $7.8 billion received in 2020. 

Despite the increase in crime, illicit transactions accounted for only 0.15% of total volume as crpyto trading volume grew to $15.8 trillion in 2021, up 567% from 2020 totals. 

Legitimate cryptocurrency adoption far outpaced illicit activity, but illicit activity still jumped nearly 80% year over year. 

In fact criminal activity as a percentage of cryptocurrency transaction (0.15%) was by far the lowest percentage over the past five years with the 3.37% mark in 2019 marking the high. 

"Cryptocurrency usage is growing faster than never before"

Types of Crypto Attacks

Decentralized finance (DeFi) platform theft is one of the most popular way crypto thieves attack their targets. DeFi, which is very popular, aims at eliminating middlemen, from traditional financial services like loans, deposit, trading, through programmable codes called smart contracts. A smart contract is written on a public blockchain - ethereum, polygon, avalanche - and it executes automatically when the conditions are met.

In August 2021, hackers pulled off one of the biggest thefts in crypto history, stealing more than $600 million from DeFi platform Poly Network. 

Ransomware is also another popular tactic for crypto thieves. 

Hackers gain access to data illicitly and lock the user out. Then they demand crypto payment in exchange for the data back. 

In 2021, meat processor JBS said that it paid $11 million in bitcoin after a cyber attack. 

Other high profile ransomware victims in 2021 included Howard University, the NBA's Houston Rockets team and insurer CNA Financial Corp.

The hackers choose to accept payment in cryptos like bitcoin because of the anonymity of the transactions.