Global crypto criminal gains down in 2023, says Chainalysis report
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Data also showed that there has been a shift in the types of assets involved in crypto-based crime, from Bitcoin to stablecoins.
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SINGAPORE - The total value of illegal gains from cryptocurrency crimes around the world went down in 2023 after peaking in 2022, a Chainalysis report said.
The global amount received by illicit cryptocurrency addresses in 2023 fell 39 per cent to US$24.2 billion (S$32.5 billion), down from US$39.6 billion in 2022, said the blockchain research firm’s 2024 crypto crime report.
This was largely due to the exclusion of FTX creditor claims of US$8.7 billion in 2023, the firm said on Jan 18.
Stripping out the FTX claims in 2022, the total value of illegal gains from crypto crimes would have fallen 22 per cent in 2023.
Crypto exchange FTX, the brainchild of Sam Bankman-Fried, collapsed in November 2022 convicted in the United States on charges of wire fraud, conspiracy and misappropriation of customer funds
Chainalysis said that the US$24.2 billion figure is almost certain to rise after a year as it identifies more illicit addresses and incorporates their historic activity into its estimates. For instance, it raised its estimate of illicit transaction volume in 2022 from US$20.6 billion to $39.6 billion one year later.
Of the total illicit transaction volume measured in 2023, Chainalysis said 61.5 per cent or US$14.9 billion were from sanctioned entities and jurisdictions.
The report found that illicit activity made up 0.34 per cent of total crypto transaction volume on the blockchain in 2023, down from 0.42 per cent in 2022.
Data also showed there has been a shift in the types of assets involved in crypto-based crime, from Bitcoin to stablecoins.
Stablecoins are digital currencies that are usually pegged to fiat like the US dollar, or a commodity, on a one-to-one basis.
Through 2021, Bitcoin was the favoured choice among cyber criminals due to its high liquidity, the report said, adding that this has changed in the last two years.
Stablecoins’ share of all crypto activity has grown in the past two years and they now account for the majority of all illicit transaction volume, said Chainalysis. This is particularly so for illegal transactions relating to scams and sanctioned entities and jurisdictions.
The report noted that dark net market sales and ransomware extortions still take place predominantly in Bitcoin.
Chainalysis said both crypto scamming and hacking revenue fell significantly in 2023, with total illicit revenue for the two down 29.2 per cent and 54.3 per cent, respectively.
It noted there are more crypto scams when the market is good, adding that they are more difficult to uncover.
Crypto hacking, the report noted, is more obvious and the downward trend could mean that security practices are generally better.
On the other hand, ransomware and dark net markets are two of the most prominent forms of crypto crime that saw revenues rise in 2023, in contrast with the overall trends.
“The growth of ransomware revenue is disappointing following the sharp declines we covered in 2023, and suggests that perhaps ransomware attackers have adjusted to organisations’ cyber security improvements, a trend we first reported earlier this year,” Chainalysis said.
It added that the growth in dark net market revenue also comes after a 2022 decline in revenue.
Chainalysis said its data excluded funds derived from non-crypto native crime, for instance, conventional drug trafficking in which crypto is used as a means of payment.
It added that the report factors in funds sent to addresses identified as illicit and funds that are stolen in crypto hacks.
