Chainalysis predicts a 29% decrease in cryptocurrency crime by 2023

adminJanuary 20, 2024

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According to an upcoming Chainalytic report, cryptocurrency-related crimes have declined significantly in 2023, with assets stolen through fraud falling by nearly a third compared to the previous year. The full report is due to be released in February and highlights a significant decline in illicit profits of more than 54%.

In 2023, stolen cryptocurrencies amounted to $24.2 billion, or just 0.34% of all on-chain transactions. This is a notable improvement over the previous year, when it accounted for 0.42% of transactions, totaling $39.6 billion. These statistics include funds sent to addresses classified as “illegal” and assets stolen during various cyber hacks.

It is important to note that the unusually high figure for 2022 includes $8.7 billion associated with FTX creditor claims. Chainalysis clarified its approach, saying, “In last year’s report, we decided to exclude volume associated with companies such as FTX until the legal proceedings surrounding the alleged fraudulent activity were resolved.” This change in methodology follows the legal ruling against FTX founder Sam Bankman-Fried, who was found guilty on seven counts of fraud and conspiracy in November 2023.

Last August, Optimism Network’s credit markets were hacked, resulting in the theft of 4,323.6 ETH, worth about $7 million at the time. Canadian authorities also reported that cryptocurrency-related scams had cost citizens more than $22.5 million in October.

Last year, the U.S. Department of Justice indicted three Americans on charges of laundering more than $10 million in cryptocurrency. If convicted, he could face up to 30 years in federal prison. During the same period, Chainalytic worked with the DOJ to freeze $225 million USDT related to human trafficking.

Chainalysis also observed changes in cybercriminals’ tactics. Bitcoin still remains the top cryptocurrency, but it is no longer the preferred choice among scammers. Stablecoins have attracted attention due to their high liquidity. The company noted that stablecoins now account for the majority of illicit trading volume, although this is not the case for all cryptocurrency-related criminal activity.

By 2021, Bitcoin has become the most preferred cryptocurrency for cybercriminals due to its high liquidity. However, things have changed over the past two years, and stablecoins now account for the majority of all illicit trading volume.

The report emphasized that despite the decline in stolen cryptocurrencies, criminal activities such as ransomware attacks and darknet market operations have surged, resulting in significant profits compared to the previous year.

Massachusetts Sen. Elizabeth Warren, a critic of cryptocurrencies, called on federal regulators to step up efforts to combat illegal activity related to digital currencies. She expressed concern that cryptocurrency lobbyists are undermining bipartisan plans to combat cryptocurrency terrorist financing.

Separately, the United Nations Office on Drugs and Crime (UNODC) reported an increase in money laundering through online casinos in East and Southeast Asia. As Jeremy Douglas, Regional Representative for Southeast Asia and the Pacific highlighted in the UN report, transnational organized crime in the region has developed rapidly, with a significant shift towards the adoption of technology.

TRON Blockchain Used for Money Laundering?

The UN report also highlighted the role of USDT stablecoins, especially on the Tron blockchain, in money laundering activities in Southeast Asia due to their stability, transaction anonymity, and low fees. It is worth noting that the United States has recently pledged to prevent illicit financial flows and crack down on non-reporting cryptocurrency companies through legal action against prominent figures in the cryptocurrency industry.

Blockchain security company CertiK also reported positive trends, with cryptocurrency hacking revenues falling by more than 51% in 2023. As CertiK co-founder Ronghui Gu noted, these developments represent a significant improvement in blockchain security.