Chainalysis: $24 Billion Sent to Illicit Addresses in 2023
A recent report from crypto research firm Chainalysis revealed that approximately $24.2 billion worth of cryptocurrency was sent to illicit wallet addresses in 2023. These addresses were associated with sanctions, terrorist financing, and scams. The figure is considered a conservative estimate, and it is expected to rise as more illicit addresses are identified.
Crypto Crime and Identifying Illicit Addresses
Chainalysis focused on crypto-related crime and acknowledged the challenge of distinguishing between proceeds from crypto-related and non-crypto-related criminal activities based on blockchain data alone. The data included cryptocurrency sent to identified illicit addresses as well as funds stolen in crypto hacks.
The Role of Sanctioned Entities and Jurisdictions
In 2023, sanctioned entities and jurisdictions accounted for $14.9 billion of the total illicit transaction volume, making up 61.5% of the measured illicit transaction volume for the year. This highlights the significant impact of sanctioned services on overall totals.
Decrease in Illicit Activity
The share of all crypto transaction volume associated with illicit activity decreased from 0.42% in 2022 to 0.34% in 2023. While Bitcoin was previously the preferred choice among cybercriminals, stablecoins now account for the majority of illicit transaction volume. However, certain forms of cryptocrime still predominantly involve Bitcoin, such as darknet market sales and ransomware extortion.
Decline in Scamming and Hacking Revenues
Crypto scamming and hacking revenues declined significantly in 2023, with illicit revenue down by 29.2% and 54.3%, respectively. Scammers have evolved their tactics, adopting romance scam methods to build fraudulent investment relationships. The decline in hacking revenue can be attributed to improved security practices, including a reduction in decentralized finance (DeFi) hacking incidents.
Hot Take: UN Report on Money Laundering with USDT
A recent report by the United Nations Office for Drugs and Crime highlighted the use of the USDT stablecoin on the Tron blockchain for money laundering in Southeast Asia. The report emphasized the stability, transaction anonymity, and low fees of USDT as key factors contributing to its role in illicit activities. However, the U.S. government has expressed its intention to crack down on crypto firms that fail to block and report illicit money flows. This underscores the need for increased regulation and compliance within the cryptocurrency industry.
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