Tag: Chainalysis

Central & Southern Asia Lead in 2023 Crypto Adoption, Chainalysis Reports

by Blockchain News

Central and Southern Asia are emerging as dominant regions in the global grassroots adoption of cryptocurrencies, according to the 2023 Chainalysis Global Crypto Adoption Index released on September 12.

Chainalysis, in its fourth annual Global Crypto Adoption Index, measures countries’ involvement in the crypto space by combining on-chain data with real-world statistics. The focus isn’t on countries with the highest transaction volumes, which would be predominantly dominated by wealthy nations. Instead, the index aims to spotlight countries where the average individual is more actively participating in the crypto ecosystem. 

The index consists of five sub-indexes: 

1. On-chain cryptocurrency value received at centralized exchanges, weighted by purchasing power parity (PPP) per capita.

2. On-chain retail value received at centralized exchanges, also weighted by PPP per capita.

3. Peer-to-peer (P2P) exchange trade volume, weighted by PPP per capita and the number of internet users.

4. On-chain cryptocurrency value received from DeFi (decentralized finance) protocols, weighed by PPP per capita.

5. On-chain retail value received from DeFi protocols, similarly weighted.

To estimate transaction volumes for these sub-indexes, the team uses web traffic patterns related to the relevant cryptocurrency services and protocols. Acknowledging that web traffic data might not be perfect, Chainalysis takes confidence from its vast data set, which includes “hundreds of millions of transactions and 13 billion web visits.”

India, positioned within the Central & Southern Asia and Oceania (CSAO) region, leads the 2023 Global Crypto Adoption Index. Six of the top ten countries are from the CSAO region, underscoring the area’s prominence in the crypto adoption landscape. Other notable entries include Nigeria, Vietnam, and the United States, ranked second, third, and fourth, respectively.

Interestingly, while global grassroots adoption seems to have declined, a different narrative unfolds in the subset of lower-middle-income (LMI) countries. LMI nations, which include rising economies such as India, Nigeria, and Ukraine, have exhibited the most robust recovery in grassroots crypto adoption over the past year. Notably, these countries have witnessed growth in crypto adoption that surpasses their Q3 2020 levels, even while other wealth categories lag.

LMI countries hold special significance as they house 40% of the world’s population and are characterized by dynamic industries and burgeoning populations. With crypto adoption burgeoning in LMI countries and institutional interest from high-income nations, the future may witness a unique blend of top-down and bottom-up adoption approaches.

The complete findings, trends, and insights are set to be detailed in the upcoming “2023 Geography of Cryptocurrency Report” by Chainalysis.

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

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CoinDesk Under Fire for Retracting Articles on Justin Sun and Chainalysis

by Blockchain News

Leading cryptocurrency news source CoinDesk has lately come under criticism for removing stories that criticised specific players in the industry. The retractions have called into doubt the platform’s commitment to balanced reporting and editorial integrity.

L0la L33tz, a Twitter user, disclosed that CoinDesk had withdrawn an opinion piece she had published regarding Chainalysis on August 28, 2023. The centrepiece of the report was a witness statement made by Chainalysis‘ head of investigations, Elizabeth Bisbee, “in which she admitted to having no scientific evidence of the software’s accuracy.” Along with failing to notify L0la L33tz of the retraction, CoinDesk allegedly failed to disclose that its parent firm, DCG, had a “substantial investment in Chainalysis Inc.” “Today I discovered that @CoinDesk removed my opinion piece on @chainalysis… CoinDesk did not notify me of the retraction or reveal the sizeable interest its parent firm, DCG, has in Chainalysis Inc.

On August 27, 2023, a different Twitter user named Cryptadamist brought attention to the fact that CoinDesk has also since removed a Justin Sun-critical piece because it did not adhere to their “standards.” Coindesk recently withdrew an article that was critical of Justin Sun because it didn’t adhere to their “standards,” contrary to what they claim they almost never do.

These occurrences have sparked a discussion regarding the function of the media in the bitcoin sector. The retractions, according to critics, undermine CoinDesk’s reputation and imply a lack of openness. Speculation regarding the impact of outside influences, such as investments or partnerships, on CoinDesk’s editorial choices is further fueled by the company’s failure to provide a public retraction statement or explanation.

The incident highlights the more general problem of journalistic ethics in the high-stakes, quick-paced world of cryptocurrency reporting. The need for objective, truthful reporting is more urgent as the sector expands. For investors, regulators, and the general public, media sources are a crucial source of information. Any apparent bias or lack of transparency may have significant effects, not just on the media outlet’s reputation but also on the amount of public confidence in bitcoin journalism as a whole.

Due to CoinDesk’s recent activities, some have begun to wonder whether the platform can be relied upon to “act in favour of the people, putting factual reporting over shareholder incentives,” as L0la L33tz noted. The retractions highlight the need of preserving editorial independence and openness for other media entities covering the cryptocurrency field.

As of right now, CoinDesk hasn’t made any public remarks addressing the retractions or the bias claims. The instances serve as a reminder that media outlet integrity continues to be a subject of continuing worry and scrutiny in the quickly changing crypto scene.

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Multichain CEO’s Arrest Triggers Operational Freeze

by Blockchain News

In a series of unfortunate events, the Multichain protocol, a cross-chain router protocol, has been left in a state of uncertainty following the arrest of its CEO, Zhaojun, on May 21, 2023. The arrest led to a series of operational disruptions, including the revocation of operational access keys to the Multichain’s MPC node servers, which were under Zhaojun’s personal control.

The Multichain team lost access to the servers and all operational funds, as they were under Zhaojun’s control. Despite the challenges, the team managed to maintain project operations to the best of their abilities through the remaining access on some non-MPC servers that hadn’t been revoked yet.

On May 30, the team informed the community about Zhaojun’s disappearance and the technical issues they were facing. However, the situation worsened when user assets locked on the MPC addresses were transferred to unknown addresses abnormally on July 7. Zhaojun’s sister, who had gained access to the cloud server platform, transferred the remaining user assets in the router pool to EOA addresses controlled by her on July 9.

However, on July 13, Zhaojun’s sister was taken into custody by the police, leaving the status of the preserved assets uncertain. As a result, the Multichain team has been forced to cease operations due to the lack of alternative sources of information and operational funds.

In response to the large, unauthorized withdrawals from Multichain on July 6, stablecoin issuers Circle and Tether froze over $65 million in assets tied to the suspected exploit of Multichain on July 8. 

Blockchain security and analytics firm Chainalysis described the July 6 withdrawals as a possible rug pull, suggesting it could have been an inside job. Despite these measures, the future of Multichain remains uncertain, with the team urging users not to use the Multichain service anymore.

On July 10, a report revealed that the Multichain Executor address had been draining anyToken addresses across many chains, leading to the loss of over $263,524.33 worth of tokens.

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Israeli Authorities Disrupt Hezbollah and Iran Quds Force Terrorism Financing Crypto Infrastructure, Seize $1.7 Million

by Blockchain News

Israeli authorities have achieved a significant milestone in the fight against terrorism financing, according to Chainalysis. On June 27, 2023, Israeli Defense Minister Yoav Gallant announced that Israel’s National Bureau for Counter Terror Financing (NBCTF) successfully disrupted the cryptocurrency infrastructure used by Hezbollah, a heavily sanctioned terrorist group based in Lebanon, and Iran’s Quds Force, known for its extensive funding and collaboration with Hezbollah. This operation marks the first time that cryptocurrency has been seized from these organizations, with a total value of approximately $1.7 million. The joint efforts also resulted in the dismantling of the cryptocurrency-based terrorism financing network operated by both groups. It is worth noting that Chainalysis tools played a vital role in facilitating this landmark achievement in national security.

The seizure carried out by NBCTF represents yet another significant victory in the ongoing battle against cryptocurrency-based terrorism financing. The announcement sheds light on the operational tactics employed by Hezbollah and other terrorist organizations in utilizing cryptocurrencies for their illicit activities.

Traditionally, Hezbollah has relied heavily on financial support from Iran, particularly through the Iran Quds Force of the Islamic Revolutionary Guard Corps (IRGC). However, the recent revelations indicate a shift in their funding methods, with a portion of the funds being channeled through cryptocurrencies. The investigation uncovered a pattern wherein funds were transferred from financial facilitators to hawala services and over-the-counter (OTC) brokers before being directed to Hezbollah-controlled addresses at mainstream cryptocurrency exchanges. Previous analyses primarily focused on the laundering of small donations, rather than funding from state sponsors like Iran. Thus, these findings provide crucial insights into the evolving tactics of terrorism financing.

The NBCTF’s seizure primarily targeted the wallets controlled by Tawfiq Muhammad Said Al-Law, a hawala operator based in Syria. Al-Law collaborated with senior Hezbollah operators, including Muhammad Qasim Al-Bazzal and Muhammad Ja’far Qasir, both of whom are sanctioned by the Office of Foreign Assets Control (OFAC). Their collaboration facilitated the operation of Hezbollah’s cryptocurrency funding infrastructure, with Qasir playing a crucial role in managing financial disbursements from Iran’s Quds Force to support Hezbollah’s activities.

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Chainalysis Acquires Transpose to Bolster Blockchain Data Infrastructure and Accelerate Towards an On-Chain Future

by Blockchain News

Chainalysis, the leading blockchain data and analytics provider, announced the acquisition of Transpose, a prominent blockchain data and infrastructure firm. This move positions Chainalysis to bolster its capabilities and further its vision of a future dominated by on-chain transactions.

Transpose is known for simplifying the building of applications using web3 data, facilitating smooth user experiences, powering wallet applications, and enabling detailed analysis of financial activity. Their services have also been instrumental in fulfilling tax and compliance requirements.

Chainalysis, a firm believer in blockchain’s potential to revolutionize value exchange in the same way the internet changed information exchange, sees this acquisition as a strategic move towards that future. There’s a growing trend amongst companies and developers to move away from complicated data systems, which rely on unreliable node services or incomplete data providers. In this light, Transpose’s offerings hold significant promise, with their fast, flexible, and dependable APIs providing access to precise historical and real-time blockchain data.

The inclusion of Transpose’s technology and team is expected to fast-track Chainalysis’s roadmap, strengthening its standing as the most trusted, scalable, and straightforward source of web3 data and apps in the industry.

With the acquisition, Chainalysis extends a warm welcome to Transpose, and looks forward to collaborating with their combined customers and partners to work toward a more efficient and transparent financial system

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DeFi Hack Linked to North Korea

by Blockchain News

The DeFi world was rocked when Euler Finance fell victim to the biggest DeFi hack of 2023, with $197 million in funds stolen. Since then, the crypto community has been closely following the on-chain movements of the stolen funds, hoping to track down the attacker. Blockchain investigator Chainalysis recently identified that 100 ETH from the stolen funds was transferred to an address linked to North Korea.

The hacker responsible for the Euler Finance hack also transferred 3,000 ETH to Euler’s deployer account without disclosing their intent. However, no other transfers have been made at the time of writing, leaving many in the crypto community speculating whether the hacker was trolling or if they genuinely considered accepting Euler Finance’s bounty reward of $20 million.

While Chainalysis has linked the stolen funds to North Korea, it has also highlighted the possibility of misdirection by other hackers. It is unclear whether North Korea is actually involved in the hack or if the hacker was simply using the address to throw investigators off their trail.

The Euler Finance hack has raised questions about the security of DeFi platforms, as Euler Labs CEO Michael Bentley expressed disappointment in the hack, revealing that ten separate audits over two years had assured its security. The fact that the hacker was still able to access and steal the funds has highlighted the need for stronger security measures in DeFi platforms.

The use of DeFi platforms has skyrocketed in recent years, and the potential rewards have attracted many hackers seeking to exploit vulnerabilities in the system. This has led to an increase in DeFi hacks, with many experts calling for stronger security measures to protect investors’ funds. The Euler Finance hack serves as a reminder that even with multiple security audits, DeFi platforms are not immune to hacks, and investors should exercise caution when investing in these platforms.

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Eastern Asia’s Crypto Market Growth Halts, China’s Crypto Transaction Volume Drops by 31% YoY

by Blockchain News

Chainalysis, a US blockchain analysis firm, released a new research study Thursday, showing that Eastern Asia is the fourth-largest cryptocurrency market, receiving $777.5 billion worth of crypto between July 2021 and June 2022.

This figure represents just under 13% of global transaction volume during that time period.

As a result, the study identified that Eastern Asia has lost ground to other regions this year. The region saw year-over-year transaction volume growth of just 4%, making it the region with the lowest crypto activity this year, according to the research. Last year, the region was ranked as the third biggest region by crypto transaction volume at this time. 

Source: Chainalysis

The biggest reason for this loss is likely due to the decline in cryptocurrency activity in China, the largest market in the region. While the study identified that China saw its crypto transaction volume drop by 31% compared to the previous year-long period, neighbors like Japan more than doubled transaction volume. This is likely due to Chinese government crackdowns on crypto activity over the last year, the study revealed.

Besides the low cryptocurrency trading activities in the region, the data indicates that Eastern Asia has surprisingly low DeFi adoption. Over the year-long time period Chainalysis conducted this study, DeFi made up just 28% of transaction volume in Eastern Asia, less than all but one other region – Eastern Europe – as shown in the figure below.

The data shows that Japan’s crypto market has grown significantly over the year-long period studied, with on-chain transaction volume increasing 113.2% over the previous 12 months, compared to 72% for the next-closest country, South Korea, and 31.1% for China.

To explain Japan’s resilient crypto activities, one of the reasons is due to the relatively high embrace of DeFi. Despite having a smaller overall crypto market, Japan’s DeFi transaction volume is almost double the size of South Korea’s at $56.7 billion and close to China’s total of $67.6 billion, as indicated in the figure below. The research shows that decentralized exchange (DEX) trading may be eating into trading on centralized services, which have not witnessed similar growth.

As the data highlighted above, China has witnessed a huge decline in cryptocurrency activity, likely due to government crackdowns imposed last year. However, despite a 31.1% drop-off in transaction volume, China remains the biggest crypto market in the region, the fourth overall in the world, and ranked tenth for grassroots adoption on Chainalysis’ global crypto adoption index.

While government crackdowns have had a clear impact, China’s cryptocurrency market remains strong, with healthy transaction volumes across both centralized and DeFi services. The figure below shows that China’s trading activity has started to pick back up in recent months, and even mining, which saw a massive fall in activity following the ban, has made a comeback in the country.

Early this month, Chainalysis released a similar study showing that emerging markets, such as the region of the Middle East and North Africa (MENA), dominated this year’s global crypto adoption index. Latin America became the second in transaction volume growth, North America was third, and Central and Southern Asia close behind.

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BNY Mellon Launches Crypto Custody Service – Report

by Blockchain News

Bank of New York (BNY) Mellon has announced that its digital assets custody service is now live as it seeks to deepen its foothold in the emerging cryptocurrency ecosystem. 

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Ranked amongst the oldest and most capitalized banks in the United States, BNY Mellon said the digital assets custody solution will aid its role as a major bridge between the emerging crypto world and the broader traditional financial ecosystem.  

“Touching more than 20% of the world’s investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets,” said Robin Vince, Chief Executive Officer and President at BNY Mellon. “We are excited to help drive the financial industry forward as we begin the next chapter in our innovation journey.”

The bank said it launched the crypto custody service by integrating the technologies of both Fireblocks and Chainalysis, noting that these firms will help it maintain the adequate security and compliance necessary to stay relevant in the highly competitive industry now and in the future. 

Arguably, BNY Mellon is positioning itself for a future that digital currencies may soon dominate. The banking giant said it commissioned a survey in which 91% of respondents who are institutional investors said they would be interested in injecting funds into tokenized products. As many as 41% of these respondents are currently holding crypto on their balance sheet, and 15% plan to acquire these assets in the near future.

With this realization, the bank said it is looking to float new products and solutions that can help it converge the needs of its traditional clients as well as those who consider crypto to be the future.

“As the world’s largest custodian, BNY Mellon is the natural provider to create a safe and secure Digital Asset Custody Platform for institutional clients,” said Caroline Butler, CEO of Custody Services at BNY Mellon. “We will continue to innovate, embrace new technology and work closely with clients to address their evolving needs.”

Besides BNY Mellon, Morgan Stanley, Goldman Sachs, and JPMorgan, amongst others, are also heavily invested in the space with their own tailored products and services hitting the market.

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MENA Region Emerges as The Fastest Growing Crypto Market: Chainalysis Report

by Blockchain News

US blockchain analysis firm Chainalysis released its latest report Wednesday, indicating that the region of the Middle East & North Africa (MENA) enjoys the fastest growing tendency in terms of cryptocurrency adoption despite it is viewed as one of the smaller crypto markets in the global adoption index.

According to the report, users in the MENA region obtained $566 billion in cryptocurrency from July 2021 to June 2022 – an increase of 48% from what they received the year before.

The report further identified MENA as the home to three of the top thirty countries in this year’s index: Turkey (12), Egypt (14), and Morocco (24). The research identified the key drivers of such adoption in these nations include savings preservation, remittance payments, and increasingly permissive crypto regulations.

In Turkey and Egypt, rapid fiat currency devaluations have strengthened the appeal of cryptocurrency for savings preservation among users. As of August, Turkish inflation hit 80.5%, while the Egyptian Pound weakened by 13.5%.

Between July 2021 and June 2022, the report showed that the crypto transaction volume in Egypt tripled compared to the previous year. Turkey remains the largest crypto market in the region, with its users receiving $192 billion during the same period, per the document.

The report further identified that Morocco’s inflation rates have reached a more manageable level of 5.3%. However, the North African country’s significant levels of crypto adoption appear to be tied to the government’s newly permissive crypto stance. In 2017, the central bank of Morocco declared penalties and fines for users found transacting cryptocurrencies within the country. But earlier this year, the central bank formed a partnership deal with the IMF and the World Bank to create crypto regulations that emphasize innovation and consumer protection.

The report further acknowledged that while the member states of the Gulf Cooperation Council (GCC) – Saudi Arabia, Kuwait, the United Arab Emirates (UAE), Qatar, Bahrain, and Oman – rarely make it to the top of the crypto adoption index, their role in the crypto ecosystem can never be underestimated.

The Chainalysis report identified Saudi Arabia as the third-largest crypto market in all of MENA, and UAE is the fifth. These Arab states have deep ties to the global crypto markets. For instance, Dubai has become a hub for crypto firms that serve customers all across Asia and Africa, not just in the Middle East.

According to the report, Afghanistan, one of the former MENA leaders in grassroots crypto adoption, is currently experiencing a major downturn. In Chainalysis’ 2021 crypto adoption index, Afghanistan was number 20 on the list. But since the Taliban’s takeover of the regime last August, the country has fallen to the bottom of this year’s list. Under the Taliban’s rule, cryptocurrency is equated to gambling and declared haram. And so far, several crypto dealers have been arrested in the country.

Last month, Chainalysis published a similar report showing that despite the global cryptocurrency adoption slowing down due to the impacts of the crypto winter, emerging nations continued dominating the adoption index this year as they did the year before.

Emerging markets have appeared to be on top in terms of adoption as they surpass high-income nations. According to the report, the top ten nations with the highest crypto adoption across the world are (1) Vietnam, (2) the Philippines, (3) Ukraine, (4) India, (5) the United States, (6) Pakistan, (7) Brazil, (8) Thailand, (9) Russia, and (10) China. As can be seen in the list, the US is the only representative of high-income countries within the index. China, Russia, and Brazil are upper-middle-income countries.

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Crypto Adoption in Sub-Saharan Africa Rises, Study Shows

by Blockchain News

Crypto usage in Sub-Saharan Africa is becoming mainstream rather than speculation, according to a report by blockchain analytic firm Chainalysis.

The report dubbed “How Cryptocurrency Meets Residents’ Economic Needs in Sub-Saharan Africa,” disclosed that the number of small retail transfers has surged, despite the bear market occurring in May. On the other hand, transfers of different sizes have dropped.

Per the study:

“If many of the people carrying out small retail transactions are trading cryptocurrency out of economic necessity — especially in countries where the values of local fiat currencies are dropping, as we’ve seen in Nigeria and Kenya, for example — then those people may be more willing to continue trading despite price drops.”

Source: Chainalysis

The report pointed out that many young people in the region were taking the cryptocurrency route to build and preserve wealth despite low economic opportunities. 

Based on an interview with Chainalysis, Adedeji Owonibi, the founder of Nigeria-based blockchain consultancy Convexity, noted:

“We see a lot of daily traders who are trading to make ends meet.”

He added:

“We don’t have big, institutional-level traders in Sub-Saharan Africa. The people driving the market here are retail. Nigeria has a ton of highly educated young graduates with high unemployment rates, no jobs available — crypto to them is a rescue. It’s a way to feed their family and solve their daily financial needs.”

Chainalysis found out that the uniqueness of Sub-Saharan Africa was pegged on the high usage of peer-to-peer (P2P) platforms and the retail market based on the transaction volume witnessed. Per the report:

“Retail transfers make up 95% of all transfers, and if we drill down to just small retail transfers under $1,000, the share becomes 80%, more than any other region.” 

Source: Chainalysis

With P2P exchanges clocking 6% of the entire crypto transaction volume in Sub-Saharan Africa, they are a fundamental part of the ecosystem. This is double that of the Central & Southern Asia and Oceania region, which comes second.

Source: Chainalysis

Creativity played an instrumental role in enabling leading P2P platforms like Paxful set foot on African soil. For instance, connecting Chinese and Nigerian gamers with gift cards.

Ray Youssef, the Paxful CEO, added:

“We had to get Bitcoin into Africa, which was difficult because it’s so hard to get money out of Africa. We needed a clever hack to make that happen. That hack ended up being gift cards.That got Bitcoin into Nigeria, and then the rest of Western Africa.”

Meanwhile, crypto exchange Binance recently launched a crypto education tour in five French-speaking countries to propel blockchain adoption and financial accessibility, Blockchain.News reported. 

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