Crypto activity determined as "high risk" or "illicit" has surged in Eastern Europe since the start of the Russia-Ukraine war, according to a report by blockchain analytics firm Chainalysis.
The report reveals that 18.2% of all crypto transactions in Eastern Europe are associated with risky or illicit activity.
A portion of risky activity in Eastern Europe comes from interaction with high-risk crypto exchanges, which typically don't require customers to submit know-your-customer (KYC) information.
Russian citizens have been forced to use lesser-known exchanges after a series of European Union (EU) sanctions restricted Russians from accessing European crypto services. Neighboring Eastern European nation Estonia, which last year was considered a crypto and tech hub, is expected to see an exodus of 90% of crypto business as it plans to enforce stricter rules around the digital asset industry later this year.
Whilst the initial Chainalysis figures paints a pejorative picture of Eastern Europe's crypto activity, it's vital to note that illicit activity is on a par with North America and Latin America - and that it is dwarfed by illicit activity in Sub-Saharan Africa.
The figure that skews the data is connected to high-risk activity, which could be anything from online gambling to a high-risk exchange or decentralized finance (DeFi) protocol. As Russians have been prohibited from accessing European crypto businesses due to sanctions, the rise in high risk activity connected to exchanges is expected.
DeFi is an umbrella term for lending, trading and other financial activities carried out on a blockchain without traditional middlemen.
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