Crypto Crime Drops; Market Poised For Growth

News Desk -


In its most recent annual examination of crypto-related criminal activities, Chainalysis, a blockchain data platform, discovered that the value received by illegal cryptocurrency addresses throughout 2023 amounted to US$24.2 billion. This marks a significant decline from the all-time high of US$39.6 billion recorded in 2022. Of this total, US$14.9 billion, representing the majority (61.5%) of illicit transaction volume, was associated with sanctioned entities.

The increasing maturity of digital assets is evident in the fact that crypto crime comprised only 0.34% of the total on-chain transaction volume in the previous year. Eric Jardine, Cybercrime Research Lead at Chainalysis, noted, “With Bitcoin recently surpassing the US$46,000 mark and the recent SEC approval of BTC spot ETFs, indications suggest that the crypto winter is thawing. Alongside the substantial reduction in crypto crime activities last year, a new growth phase seems imminent. The transparency of blockchains allows analytics tools, such as those from Chainalysis, to assist regulators, law enforcement, and crypto businesses in identifying and responding to malicious activities on the blockchain, fostering the rapid maturation of the segment and enhancing consumer confidence.”

The notable decrease in illicit transaction volume is largely attributed to a sharp decline in crypto scams and stolen funds, down 29.2% and 54.3%, respectively. Interestingly, the drop in stolen funds is mainly due to a significant decrease in DeFi hacking, suggesting a potential improvement in DeFi protocol security practices. This is positive news for the UAE crypto community, where a higher percentage of crypto activity occurs on decentralized exchanges (48%) compared to centralized exchanges (46%).

In contrast, ransomware and darknet markets, prominent forms of crypto crime, experienced increased revenues in 2023, deviating from overall trends. Jardine expressed concern, stating, “The growth of ransomware revenue is disappointing, hinting that ransomware attackers may have adapted to cybersecurity improvements. The Hydra shutdown has seemingly had little impact on darknet markets, as illicit activity on these channels is rebounding, with total revenue approaching 2021 levels.”

Another significant finding in the Chainalysis report is the ongoing shift away from Bitcoin as the preferred cryptocurrency among cybercriminals. While certain illicit activities still predominantly use Bitcoin, others, such as scamming and transactions linked to sanctioned entities, have shifted to stablecoins. Bitcoin was utilized in just under 25% of all illicit transactions, lagging behind stablecoins, which now dominate illicit activity, aligning with the overall growth of stablecoins.

“This shift away from Bitcoin is noteworthy and reflects the sector’s maturity. As 2024 unfolds, following the recent SEC decision on Bitcoin ETFs, we anticipate a push for more mature market infrastructure, fostering a healthier, more competitive custody and exchange ecosystem in the primary crypto markets,” concluded Jardine.

For further details, the complete introductory section of the Chainalysis 2024 Crypto Crime Report can be accessed here.

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