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From Scams to Stablecoins: A recently released report has unveiled a significant Downturn in Crypto Crime Trends during in 2023.
Chainalysis, a blockchain data platform, conducted its annual analysis of crypto-related crime, revealing that the total value received by illicit cryptocurrency addresses in 2023 amounted to $24.2 billion, marking a substantial decrease from the all-time high of $39.6 billion recorded in 2022. Notably, the largest share, $14.9 billion or 61.5%, of the illicit transaction volume was associated with sanctioned entities.
The growing maturity of digital assets in this category is underscored by the fact that crypto crime constituted only 0.34% of the total on-chain transaction volume last year. Eric Jardine, the Cybercrime Research Lead at Chainalysis, commented on the positive trends, stating, “With Bitcoin surpassing the $46,000 mark and the recent SEC approval of BTC spot ETFs, indications suggest that the crypto winter is thawing. The significant reduction in crypto crime activities signals a potential new growth phase.”
The remarkable reduction is mainly attributed to a sharp decline in crypto scams and stolen funds, with illicit revenue down by 29.2% and 54.3%, respectively. Interestingly, the drop in stolen funds was primarily driven by a significant decrease in DeFi hacking. This decline in DeFi hacking may signal a positive shift, indicating improvements in security practices within DeFi protocols.
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In contrast to these positive trends, ransomware and darknet markets, two prominent forms of crypto crime, experienced increased revenues in 2023. Jardine expressed concern, stating,
“The growth of ransomware revenue is disappointing, suggesting that attackers may have adapted to cybersecurity improvements. Illicit activity on darknet markets is rebounding, with total revenue approaching 2021 highs, despite the Hydra shutdown.”
The report also highlights a notable shift away from Bitcoin as the preferred cryptocurrency among cybercriminals. While Bitcoin remains prominent in certain illicit activities, stablecoins have become the primary choice for scams and transactions involving sanctioned entities. Overall, Bitcoin was used in less than 25% of illicit transactions, with stablecoins now dominating the majority of illicit activities.
Jardine concludes by noting the significance of this shift away from Bitcoin, emphasizing the sector’s maturity. He anticipates a push for more mature market infrastructure in 2024, driven by the recent SEC decision on Bitcoin ETFs, fostering a healthier and more competitive custody and exchange ecosystem in the primary crypto markets.