Crypto criminals made off like bandits as digital assets spiked in popularity, according to a 2022 cryptocurrency crime report.

Illicit transactions jumped nearly 80% to US$14bil , an all-time high, in 2021, according to blockchain analytics firm Chainalysis. Overall transaction volume jumped 567%, which shows legitimate transactions outpaced crime. Yet, illegal activity is tracking popular growth categories in crypto, including decentralised finance, or DeFi projects, the data show.

Scams and rug pulls proliferated in the year. Scamming revenue rose 82% to US$7.8 bil worth of stolen cryptocurrency, with more than a third of that total procured from so-called rug pulls, according to Chainalysis. A rug pull is a type of scam in which developers of what seemed like legitimate projects merely set up wallets to take investors’ money and run.

DeFi saw the greatest year-over-year growth - 1,964% - for laundering illicit funds, the report showed; mining activity was second at less than 500%. Chainalysis attributes the growth of crime in DeFi to "hype”; outsize returns from tokens like Shiba Inu that drove speculative trading; and the ease with which new DeFi tokens can be created.

 - Bloomberg