The amount of illicit cryptocurrency transactions reached an all-time high in 2021 at $14 billion, according to a new study due out next month.

Chainalysis, a firm that analyzes trends in the blockchain technology that underpins digital assets like cryptocurrency, said in a blog post Thursday its upcoming 2022 Crypto Crime Report will show a 79 percent year-over-year increase in cryptocurrency transactions linked to illicit addresses from 2020’s total of $7.8 billion. The report is due to be published in February.

Calling the increase in illicit activity a “significant problem,” Chainalysis said, “Criminal abuse of cryptocurrency creates huge impediments for continued adoption, heightens the likelihood of restrictions being imposed by governments, and worst of all victimizes innocent people around the world.“ The report will examine “how and where cryptocurrency-based crime increased, dive into the latest trends amongst different types of cybercriminals, and tell you how cryptocurrency businesses and law enforcement agencies around the world are responding.”

While the use of cryptocurrency by money launderers and other criminals has increased, it has not nearly kept pace with the overall use of cryptocurrency worldwide, Chainalysis said.

Across all cryptocurrencies tracked by Chainalysis, volume of transactions grew to $15.8 trillion in 2021, up 567 percent from 2020’s totals. Even though the amount of transactions linked to illegal activity increased significantly, it only represented 0.15 percent of all cryptocurrency transactions, an all-time low dating back to 2017, the research firm stated.

“[W]ith the growth of legitimate cryptocurrency usage far outpacing the growth of criminal usage, illicit activity’s share of cryptocurrency transaction volume has never been lower,” said Chainalysis. “… [C]rime is becoming a smaller and smaller part of the cryptocurrency ecosystem.”

Chainalysis added regulators made significant strides in catching up to cryptocurrency-related crime in 2021, including the Commodity Futures Trading Commission halting illegal activity and the U.S. Treasury’s Office of Foreign Assets Control’s placement of two Russian-based cryptocurrency services on its list of sanctioned entities. The blog noted U.S. law enforcement seized more than $3.5 billion worth of cryptocurrency from scammers in 2021.

Rising crime types

Two types of criminal activity dominated growth in illicit cryptocurrency transactions in 2021: scams and stolen funds.

Scams accounted for $7.8 billion in illicit cryptocurrency transactions, up 82 percent from 2020. A large portion of this total came from a type of scam called “rug pulls,” in which “developers build what appear to be legitimate cryptocurrency projects—meaning they do more than simply set up wallets to receive cryptocurrency for, say, fraudulent investing opportunities—before taking investors’ money and disappearing,” Chainalysis said.

The biggest rug pull of 2021, worth approximately 90 percent of the $2.8 billion Chainalysis said was stolen through this scam, was Turkey-based Thodex. In April, Thodex’s owner disappeared overnight, leaving more than 391,000 cryptocurrency holders with no way to access their funds.

Stolen funds totaled $3.2 billion in illicit activity in 2021, Chainalysis said, up 516 percent compared to 2020. Continuing a trend identified last year, theft from decentralized finance (DeFi) platforms skyrocketed 1,330 percent.

“In other words, as DeFi has continued to grow, so too has its issue with stolen funds,” Chainalysis said.

Roughly $2.2 billion of stolen cryptocurrency funds—72 percent of the 2021 total—were taken from DeFi protocols, Chainalysis said.