Cryptocurrency-related crimes decreased significantly last year, a report revealed.
In its latest annual analysis of cryptocurrency-related crimes, blockchain data platform Chainalysis found that the value received by illicit cryptocurrency addresses through 2023 amounted to $24.2 billion, a significant drop compared to the all-time high of $39.6 billion. dollars in 2022. This, 14.9 billion dollars, which represents the majority (61.5 percent) of the volume of illicit transactions, related to sanctioned entities.
The growing maturity of this digital asset class is further evidenced by the fact that crypto crimes accounted for just 0.34 percent of the total on-chain transaction volume last year. “Given that Bitcoin just crossed the $46,000 mark, following the recent landmark decision by the SEC to approve BTC spot ETFs, there are strong signs that the crypto winter is thawing. Coupled with the significant reduction in crypto crime activities last year, it appears that a new phase of growth is coming soon,” said Eric Jardine, Cybercrime Research Lead at Chainalysis. “Thanks to the inherent transparency of blockchains, analytics tools from companies like Chainalysis can provide regulators, law enforcement agencies, and crypto companies with the ability to detect and react to malicious activity on the blockchain.” block chain. Without a doubt, this will help the rapid maturation of the segment and reinforce consumer confidence.”
The notable drop is largely attributed to the sharp drop in crypto scams and stolen funds, whose total illicit proceeds decreased by 29.2 percent and 54.3 percent respectively. Interestingly, the decline in stolen funds was largely due to a sharp drop in DeFi hacking. DeFi is one of the most attractive and fastest-growing areas of the cryptocurrency ecosystem, largely due to its transparency. This drop could represent the reversal of a disturbing long-term trend and could be a sign that DeFi protocols are improving their security practices. This is good news for the UAE crypto community, which was one of the only countries in the region where a higher proportion of crypto activity takes place on decentralized exchanges (48 percent), rather than on centralized exchanges (46 percent).
On the other hand, ransomware and darknet markets (two of the most prominent forms of cryptocrime) recorded an increase in revenue in 2023, in contrast to general trends. "Ransomware revenue growth is disappointing after the sharp declines we saw last year, and suggests that perhaps ransomware attackers have adapted to organizations' cybersecurity improvements," Jardine said. "It also appears that the shutdown of Hydra has done little to deter darknet markets, as illicit activity on these channels is recovering and total revenues are returning to their 2021 highs."
Another key takeaway from Chainalysis' latest report is the current shift away from Bitcoin as the cryptocurrency of choice among cybercriminals. While some forms of illicit cryptocurrency activity, such as darknet market sales and ransomware extortion, still predominantly take place on Bitcoin, others, such as scams and transactions associated with sanctioned entities, have shifted to stablecoins. Overall, Bitcoin was used in just under 25 percent of all illicit transactions, far behind stablecoins that now account for the majority of illicit activity, in line with the growth of stablecoins overall.
“This move away from Bitcoin is an interesting development and again speaks to the maturity of the sector. In the wake of the recent SEC decision on Bitcoin ETFs, as 2024 progresses, I believe we will see a push for more mature market infrastructure that will foster a healthier and more competitive exchange and custody ecosystem across major crypto markets,” concluded Jardine.
