While the scope and potential of the metaverse is still being defined, the level of interest is undeniable. In fact, with McKinsey predicting its potential to generate up to $5 trillion in value by 2030, and Citibank heading for $13 trillion in the same time frame, the metaverse is simply too big for companies to ignore.
In an online survey of 100 Elliptic customers and cryptocurrency and finance professionals in May 2022, we found that at least 58% of respondents expect the metaverse to provide some commercial opportunity for their business in the next five years. Indeed, only 14% of those interviewed saw no commercial opportunities for their business in the metaverse.
This points to significant potential for commercial inclusion of both crypto-native and more traditional financial institutions in the coming months. Unfortunately, wherever there are concentrations of value, there will be crime – and the metaverse is no exception.
Criminals have noticed the interest of the metaverse
Analysis of Elliptic’s extensive data set has revealed a small but noticeable level of illicit activity already taking place in the metaverse. This is mostly related to crypto asset thefts, but we also found evidence of fraud, phishing and malware, and activities related to sanctioned actors.
As interest and engagement in the metaverse grows, we believe it could become an attractive pool of liquidity for money launderers and a potential new vector for fraudsters.
However, it is encouraging that at least 66% of respondents to our own survey are already in the process of, or intend to, assess the risk of ficriminal vectors associated with the metaverse.
We explore many of these typologies in our recent report “The future of financial crime in the Metaverse”and also look for early signs of illegal activity.
For example, we can already see that there is illicit activity associated with assets related to the metaverse of MANA and SAND. Of this illegal activity, 99.5% is related to the theft of cryptoassets – highlighting the most common criminal activity at the moment.
This reflects wider criminal activity across non-fungible tokens (NFTs) where social engineering, fake gifts and MetaMask attacks on browser wallets can create a dangerous environment for those buying, selling and transferring NFTs. We have also observed illicit activities related to native metaverse assets related to scams, phishing and malware.
In addition, we discovered a few Decentraland land sales associated with fraud and theft, which is almost evenly split between NFT markets OpenSea and LooksRare. They were launched with land stolen from MetaMask and phishing attacks on the popular NFT market OpenSea.
Exploring the future of financial crime
In the report, we explore what avenues illegal actors might use to commit financial crime, as well as explore case studies of existing metaverse-related crimes. We also provide guidance on what individuals and businesses in the crypto ecosystem can do to protect themselves from these new risks.
This report takes a deep dive into the typologies of financial crime using cryptoassets associated with the metaverse, to arm compliance teams with a comprehensive set of warning signs and case studies on:
- Illegal activity involving crypto-assets in the metaverse.
- Examples of how these indicators fit into wider criminal behaviour.
- Context on how criminals involved in these activities work to clean their illicit funds.
- How money laundering methods are evolving in relation to the metaverse.
Click here to download our metaverse report.
Metaverse Crypto Crime Compliance