Illicit cryptocurrency addresses experienced a notable decline in their received value within the cryptocurrency industry. The proportion of crypto transaction volume linked to illicit activities also saw a decrease. Cybercriminals are increasingly favoring stablecoins, while Bitcoin continues to play a prominent role in darknet market sales and ransomware incidents.
In 2023, there was a significant decline in the total value associated with illicit cryptocurrency addresses, experiencing a decrease of $24.2 billion. The projection for illicit transaction volume in 2022 rose from the previous year’s $20.6 billion to $39.6 billion, primarily attributed to the discovery of previously undisclosed active addresses linked to sanctioned services. This shift is emphasized in the findings of the Chainalysis report titled “2024 Crypto Crime Trends.” Alongside the reduction in the absolute value of illicit activities, the proportion of all cryptocurrency transaction volumes connected to illicit practices also dropped from 0.42% in 2022 to 0.34% in 2023.
There is a notable trend in cryptocurrency-related criminal activities, marked by a change in the favored assets. While Bitcoin was once the primary choice among cybercriminals due to its high liquidity, stablecoins have now taken precedence for illicit transactions. This shift aligns with the broader increase in stablecoins’ overall share of cryptocurrency activities, encompassing both legitimate and illegitimate transactions. Nevertheless, Bitcoin continues to maintain its dominance in specific types of crypto crimes, such as darknet market sales and ransomware extortion.
In 2023, there was a significant reduction of 29.2% in revenue from crypto scamming and a notable 54.3% decline in hacking-related earnings. Scammers have shifted their tactics towards romance scams, where they establish relationships with individuals to later present deceptive investment opportunities. Despite an increase in reported crypto investment scams in the US, global on-chain metrics suggest a downward trend since 2021. Unlike crypto scamming, detecting crypto hacking is more challenging due to the easily noticeable unusual outflows by industry observers. The decrease in stolen funds is mainly attributed to a decline in decentralized finance (DeFi) hacking, possibly indicating enhanced security practices.
In contrast to the general trend, both ransomware and darknet markets experienced a surge in revenue during 2023. This upturn comes after a decrease in earnings in 2022 attributed to the closure of Hydra, the predominant darknet market at that period. While no single market has emerged as a direct successor, the entire sector is recovering and approaching revenue figures reminiscent of those observed in 2021.
Illicit transactions are experiencing a significant trend, with sanctions-related activities taking center stage and constituting 61.5% of the total illicit transaction volume, amounting to $14.9 billion in 2023. The driving force behind this surge is the involvement of cryptocurrency services that either fall under sanctions imposed by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) or operate in jurisdictions subject to US sanctions but not actively enforced. It’s crucial to note that while a portion of this transaction volume is linked to illicit purposes, it also encompasses transactions from ordinary cryptocurrency users residing in these sanctioned jurisdictions. For crypto platforms under the jurisdiction of the US or UK, compliance concerns emerge due to the potential exposure to sanctioned entities, such as Garantex, a Russia-based exchange sanctioned for its involvement in money laundering facilitation, thereby posing inherent risks.
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