Crypto Crime Trends Report: Significant Drop in Illicit Transactions
According to a recent report by blockchain analytics firm Chainalysis, cryptocurrency-based crime experienced a significant decrease in 2023. The estimated value of illicit transactions dropped to $24.2 billion, marking a 39% decline from the previous year. However, different crime categories showed diverging trends.
Key Takeaways:
- Total estimated illicit crypto transaction volume fell to $24.2 billion in 2023, down from a revised $39.6 billion in 2022.
- Illicit activity accounted for 0.34% of all crypto volume, down from 0.42% previously. Stablecoins now make up the majority share.
- Crypto scamming and hacking revenues saw big declines in 2023, with shifts in tactics and improvements in security driving the drops.
- In contrast, ransomware groups and darknet markets saw revenue growth in 2023 despite prior year declines.
- Sanctions-evading entities drove nearly 62% of all measured illicit transaction volume, dominating crypto crime activity.
Chainalysis categorizes crypto crime activities into various types such as stolen funds from hacks, ransomware schemes, sanction evasion, terrorism financing, scams, and darknet market sales. The latest report provides more accurate estimates after adjustments were made to account for outlier events that affected the figures in the previous year’s report.
In terms of specific trends in 2023, stolen funds from hacking decreased by 54% due to improved security practices in decentralized finance (DeFi). On the other hand, ransomware groups saw an increase in revenue after declining since 2021. Darknet markets also rebounded following the takedown of Hydra, a prominent illegal marketplace.
However, crypto scams decreased by 29% as scammers shifted their tactics to more targeted schemes like “romance scams,” where they build relationships with individuals to trick them into making fake investments. It is important to note that underreporting may obscure the true extent of the damage caused by these one-on-one tactics.
The majority of illicit transaction volume is driven by transactions associated with sanctioned entities, accounting for over 60% of the total in 2023. It’s worth noting that not all of this activity is intentional sanctions evasion, as some estimates include usage of exchanges like Garantex, which is banned by US and UK authorities.
Hot Take: Crypto Crime Trends Reflect Progress and Challenges
The significant drop in illicit cryptocurrency transactions in 2023 indicates progress in security measures and awareness among crypto users. However, ransomware groups and darknet markets continue to pose challenges. As we enter 2024, it is crucial for blockchain intelligence firms, developers, and global law enforcement to remain vigilant and cooperate to combat these threats effectively.
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