Some crypto whales in possession of ill-gotten cryptocurrencies hold over $25 billion in multiple cryptocurrency asset classes, from “multitude of illicit sources.” This is according to a report from Chainalysis, a blockchain data platform that provides data and information to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies.
According to the report, Chainalysis defines criminal whales as any private wallet holding $1 million or more worth of cryptocurrency that has received more than 10% of its funds from illicit addresses. The report explained that this is calculated based on private wallet holdings.
The report ultimately reveals that there are a total of 4,068 criminal whales holding over $25 billion worth of cryptocurrency. It further states that criminal whales represent 3.7% of all cryptocurrency whales.
What the report is saying about the criminal whales
Looking at the year-end criminal balances over the last five years, broken down by the types of illicit activity the funds were derived from, the report reveals a significant increase in criminal balances in 2021, where criminals held $11 billion worth of funds with known illicit sources, compared to just $3 billion at the end of 2020, representing a 266.67% increase.
The statistics also show that stolen funds account for 93% of all criminal balances in 2021. In dollar terms, this is approximately $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.
The report highlighted a significant drop in criminal balances in February 2022. The report attributed the drop to the DOJ’s $3.6 billion seizure of Bitcoin stolen in the 2016 Bitfinex hack. Following that seizure, criminal balances currently stand at roughly $5 billion as of February 9, 2022.
Looking at which type of criminals tend to hold on to assets longer, darknet market vendors and administrators tend to hold their funds the longest before liquidating, while wallets with stolen funds tend to hold for the shortest amount of time.
The report also used time zone analysis to try and approximate the location of criminal whales. The report was able to attribute UTC time zones to 768 criminal whales. Diving deeper, it was revealed that UTC time zones 2, 3, and 4 are estimated to contain the most criminal whales, while time zones 1 and -9 also have a large number.
UTC time zones 2, 3, and 4 include much of Russia, including major population centres like Moscow and Saint Petersburg, which is especially interesting in the context of Russia’s outsized role in the cryptocurrency-based crime. Because this estimation only allows estimating longitudinal location, it means that there is a possibility that some of these criminal whales are based in other continents and countries within time zones 2, 3, and 4, such as South Africa, Saudi Arabia, or Iran.
The report concluded stating, “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. 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. Investigation of criminal whales represents a significant opportunity for government agencies around the world to continue their string of successful seizures, and bring to justice the biggest beneficiaries of cryptocurrency-based crime.”
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