Decrease in Illicit Crypto Addresses
According to Chainalysis, the value of illicit crypto addresses decreased to $24.2 billion in 2023. This was accompanied by a decline in the share of all crypto transaction volume related to illicit activity, from 0.42% in 2022 to 0.34%. The types of assets involved in crypto-based crime also shifted.
Stablecoins Preferred by Cybercriminals
Stablecoins have become the preferred cryptocurrency for cybercriminals in illicit transactions, surpassing Bitcoin in the past two years. They are particularly popular for scamming and transactions linked to sanctioned entities. Bitcoin is still predominantly associated with activities like darknet market sales and ransomware extortion.
Stablecoin Appeal for Sanctioned Entities
Entities subject to sanctions or operating in sanctioned regions find it appealing to use stablecoins because accessing the US dollar through conventional means can be challenging. Stablecoin issuers have the power to freeze funds if they detect illicit use, as seen with Tether’s recent action against addresses associated with terrorism and war.
Decline in Crypto Scamming and Hacking
The “2024 Crypto Crime Trends” report by Chainalysis reveals a significant decrease in revenue for crypto scamming and hacking in 2023, with a 29.2% and 54.3% decrease, respectively. Many scammers have shifted their tactics to romance scams, making it harder to uncover their fraudulent activities.
Ransomware and Darknet Markets on the Rise
In contrast to overall trends, ransomware and darknet markets saw increased revenues in 2023, reversing the declines of the previous year. This suggests that attackers have adapted to enhanced cybersecurity measures, while the growth in darknet market revenue follows the closure of Hydra, a dominant market in 2022.
Prevalence of Transactions Linked to Sanctions
Chainalysis identified a significant trend in illicit transaction volume, with transactions associated with sanctions accounting for $14.9 billion in 2023. This represents 61.5% of the measured illicit transaction volume for the year. Some of these transactions may involve ordinary crypto users residing in sanctioned jurisdictions.
Hot Take: Crypto Crime Trends
In 2023, there was a notable decrease in the value of illicit crypto addresses and a decline in the share of transaction volume related to illicit activity. Stablecoins have become popular among cybercriminals, while Bitcoin remains associated with darknet markets and ransomware. Entities subject to sanctions find stablecoins appealing, although issuers can freeze funds if they detect illicit use. Crypto scamming and hacking saw a decline, but ransomware and darknet markets experienced increased revenues. Transactions linked to sanctions constituted a substantial portion of illicit transaction volume. Overall, these trends highlight the evolving nature of crypto-based crime.
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