2020 has been an incredible year for cryptocurrencies. Despite the devastation wrought by the global Covid-19 pandemic, Bitcoin has broken its leading price record, in large part due to institutional investor interest in an asset that many in the cryptocurrency community have long believed would be Driven to new highs by increased demand.

But, as always, cryptocurrencies remain attractive, mainly due to their pseudonymous nature and the transparency and traceability it allows users to easily send funds anywhere in the world instantly. But the good news is that crimes related to cryptocurrencies have dropped significantly in 2020.

In 2019, criminal activity accounted for 2.1% of all cryptocurrency transaction volume, or about $21.4 billion in transfers. In 2020, the criminal share of all cryptocurrency activity dropped to just 0.34%, or $10 billion in transaction volume. One reason for the drop in the percentage of criminal activity is that overall economic activity nearly tripled between 2019 and 2020.

We should note that when writing last year’s report, we reported that the crime share of cryptocurrency activity in 2019 was 1.1%. This change was made due to the identification of additional addresses associated with active criminal activity in 2019. Most of these addresses are associated with yet-to-be-identified scams, primarily the PlusToken scam. Some have been linked to previously unreported ransomware attacks. Therefore, we expect the number of crimes reported in 2020 to increase over time as well.

In any case, the good news is twofold: Cryptocurrency-related criminal activity is on the decline and still represents a very small portion of the overall cryptocurrency economy.

Which crime caused 0.34% of cryptocurrency transactions related to illicit activity in 2020?

The chart above shows which crime types obtained the highest total cryptocurrency addresses from 2017 to 2020, which we usually associate with money laundering. The graph below shows the monthly amounts received by different types of criminal entities throughout the year.

As was the case in 2019, scams accounted for the majority of all cryptocurrency-related crimes, accounting for 54% of illicit activity, equivalent to receiving around $2.6 billion in cryptocurrency. However, the raw value and share of all criminal activity typified by scams is much smaller than in 2019, as 2020 has nothing to match the mammoth PlusToken Ponzi scheme, which robbed millions of victims. Walked away with more than $2 billion in funds. Darknet markets were once again the second largest criminal category, accounting for $1.7 billion worth of cryptocurrency activity, up from $1.3 billion in 2019.

But the big story of cryptocurrency-based crime in 2020 is ransomware. As counterintuitive as this may sound, ransomware accounts for only 7% of all funds obtained by criminal addresses, worth less than $350 million in cryptocurrency. However, this figure represents a 311% increase from 2019. No other category of cryptocurrency-based criminal activity has seen such a significant increase in 2020 as the work-from-home measures introduced by Covid have opened new vulnerabilities for many organisations.

As a reminder, due to under-reporting, ransom estimates should always be considered a lower bound, and as we identify more addresses associated with different breeds, especially in the later months of the year, the 2020 figure for total ransom payments is likely to change Increase. Also, we must point out that ransoms are uniquely damaging, as attacks can disable local governments and businesses for weeks. When we consider the total economic loss not only from payments, but also from businesses and governments offline in attacks, some experts estimate that in 2020, ransoms caused economic losses of $20 billion.