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According to Chainalysis, ‘Criminal Whales’ account for 4% of the Overall Pod

  • According to a new report from blockchain research firm Chainalysis, criminal whales held more than $25 billion in cryptocurrency at the end of 2021.
  • The “criminal whales” of the cryptocurrency industry are making quite a stir.

According to a new Chainalysis report, criminal whales defined as wallets containing at least $1 million in cryptocurrency and receiving 10% or more of their funds from illicit addresses accounted for nearly 4% of the total number of high value wallets last year.

Kim Grauer, Chainalysis’s director of research, stated that the findings were significant because the presence of fewer, larger targets demonstrates the potential for law enforcement seizures and the recoupment of stolen funds.

“It allows us to say, ‘This is the amount of money that can be seized if [the whales] are the subject of an investigation,'” Grauer explained.

The report comes just one week after a couple was arrested in their New York apartment for allegedly laundering the proceeds of a 2016 Bitfinex hack, and a crypto wallet containing $3.6 billion in bitcoin was seized by government officials.

The seizure of funds linked to the Bitfinex hack represented a significant portion of the estimated $11 billion in funds with known illicit sources held by criminals at the end of 2021. The case of the Bitfinex hack laundering suspects echoes many of Chainalysis’ findings about large-scale crypto criminals.

According to Chainalysis’ research, stolen funds accounted for 93 percent of all “illicit funds” held by criminals last year. Darknet market funds accounted for $448 million, scams accounted for $192 million, fraud shops accounted for $66 million, and ransomware accounted for only $30 million.

Grauer also stated that the growing balance of criminal whale wallets indicates liquidity issues, similar to the alleged Bitfinex launderers.

“If you’re a criminal whale with a lot of money and there are all these groups of people tracing funds, I suspect you have a major liquidity problem,” Grauer said.

“Perhaps you’re waiting for a technological solution that you’re comfortable with, or maybe you’re just holding it until you really need to cash out,” Grauer explained. “But if you’re holding large amounts of illicit funds, I think you’re probably aware that you have a difficult task ahead of you if you want to convert that to fiat currency.”

The report also highlighted Chainalysis’s new time zone analysis technique, which provides information about the location of criminal whales.
According to the report, UTC time zones 2, 3, and 4 which include major Russian cities such as Moscow and St. Petersburg are thought to have the highest concentration of criminal whales.
While the analysis is far from conclusive (time zones only show latitude, not longitude, implying that the criminal whales could also be in parts of Africa or the Middle East), Grauer stressed that it is a strong indicator of Russian criminal whale activity.

“Perhaps this is someone who is not based in Russia but does business with Russia,” Grauer speculated. “However, this is a much stronger signal than I expected to get from the analysis.”

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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