The world of cryptocurrency saw a significant decrease in illicit activity in 2023, with sanctioned entities playing a major role in the decline. According to Chainalysis, a leading blockchain analysis company, the value of cryptocurrency flowing into illicit addresses dropped by nearly 39% compared to the previous year. The company provided a sneak peek of its upcoming 2024 Crypto Crime Report, which focuses on funds stolen in crypto hacks and money sent to addresses identified as illicit.
In 2023, a total of $24.2 billion was received by illicit addresses, down from $39.6 billion in 2022. However, Chainalysis noted that this figure may increase as more unlawful addresses are identified and historical data is added to the analysis. For instance, the initial estimate for 2022 was $20.6 billion, but it grew to $39.6 billion due to creditor claims against the fraud-ridden crypto exchange FTX.
Sanctioned entities and jurisdictions accounted for over three-fifths of the illicit funds in 2023, totaling $14.9 billion. This trend is not surprising given the increased scrutiny on Russian entities by the Treasury’s Office of Foreign Assets Control following the country’s invasion of Ukraine. Russia continues to be a hub for ransomware actors and businesses, such as the exchange Garantex.
Ransomware and darknet markets were highlighted as areas where revenue increased in 2023, despite an overall decline in crypto crime. Chainalysis pointed out that ransomware revenue growth was disappointing, suggesting that attackers may have adapted to organizations’ cybersecurity improvements. Revenue from crypto scams and hacking both declined in 2023, with scams showing a downward trend since 2021.
According to Chainalysis, scamming is most successful in bullish market conditions when people are eager to capitalize on quick riches. The report also mentioned the devastating impact of romance scams on victims and the under-reporting of such crimes. On the other hand, hacking activities, particularly in the decentralized finance (DeFi) sector, saw a significant drop in 2023. This decline may indicate improved security practices by DeFi protocols, although the potential for outlier-driven events to shift the trend remains.
Overall, the decrease in illicit cryptocurrency activity in 2023 is a positive sign for the industry, suggesting that efforts to combat fraud and criminal activities are making an impact. Stay tuned for the full release of Chainalysis’ 2024 Crypto Crime Report for more insights into the evolving landscape of crypto crime.