Chainalysis Reports Sharp Decline in Cryptocurrency-Related Crimes in 2023

The report underscores a significant decline in illicit transaction value and an emphasis on the impact of regulatory measures.

In its forthcoming report, tracing firm Chainalysis reveals a marked decrease in cryptocurrency-related crimes in 2023, with assets stolen from scams falling by nearly a third compared to the previous year.

The 2024 Crypto Crime Report, slated for publication in February, also underscores a significant decline of over 54% in illicit revenue. In 2023, stolen cryptocurrency accounted for a mere 0.34% of total on-chain transactions, totaling $24.2 billion. This represents a significant improvement from the previous year when it made up 0.42% of transactions, amounting to a hefty $39.6 billion. These figures encompass funds transferred to addresses labeled as “illicit” and assets pilfered during various cyber hacks.

It’s crucial to note that the unusually high numbers in 2022 included $8.7 billion associated with FTX creditor claims. Chainalysis clarified its methodology, stating: “In last year’s report, we chose to exclude transaction volumes associated with firms like FTX until legal processes concerning alleged fraudulent activities were resolved.” This change followed the legal verdict against FTX founder Sam Bankman-Fried, who was convicted of seven fraud and conspiracy charges in November 2023.

During the year, a credit market on the Optimism Network was compromised in August, leading to the theft of 4,323.6 ETH, valued at approximately $7 million at the time. Additionally, Canadian authorities reported that citizens lost over $22.5 million to cryptocurrency-related scams in October.

In the same year, the U.S. Department of Justice filed charges against three U.S.-based individuals, accusing them of laundering over $10 million in cryptocurrency. If found guilty, they could face up to 30 years in federal prison. Concurrently, Chainalysis collaborated with the DOJ to freeze $225 million in USDT linked to human trafficking.

Chainalysis also noted a shift in the strategies of cybercriminals. While Bitcoin remained the dominant cryptocurrency, it was no longer the preferred choice among scammers. Stablecoins had risen to prominence, mainly due to their high liquidity. The firm highlighted that stablecoins now made up the majority of illicit transaction volume, although this wasn’t the case for all cryptocurrency-related criminal activities.

In 2021, Bitcoin was the preferred cryptocurrency among cybercriminals, likely due to its high liquidity. However, this trend has shifted over the past two years, with stablecoins now accounting for the majority of all illicit transaction volume.

Despite the decrease in stolen cryptocurrency, the report emphasized an increase in criminal activities such as ransomware attacks and darknet market operations, which generated significant revenues compared to the previous year.