In 2023, cryptocurrency research firm Chainalysis reported a decrease of nearly 40% in the value of cryptocurrency flowing into illicit addresses compared to the previous year. However, this figure is expected to rise as more illicit addresses are identified [1] [2] [3] [4] [6]. The report also highlights the significant portion of transaction volume coming from transactions with sanctioned entities [1] [2], accounting for $14.9 billion (61.5%) in 2023 [1] [2]. Stablecoins continue to be the preferred choice for illicit transactions [1] [2], and ransomware and dark net activity have seen an increase in revenues.
Description
In 2023, Chainalysis reported that the value of cryptocurrency flowing into illicit addresses decreased by almost 40% compared to the previous year, amounting to over $24 billion. However, the report also noted that this figure is expected to increase as more illicit addresses are identified. It is important to note that a significant portion of the transaction volume comes from transactions with sanctioned entities [1] [2], which accounted for $14.9 billion (61.5%) in 2023 [1] [2]. The report highlighted that stablecoins remained the preferred choice for illicit transactions, continuing the trend from the previous year [1]. Despite an overall decline in crypto crime [5], there has been an increase in revenues from ransomware and dark net activity. Chainalysis expressed disappointment in the growth of ransomware revenue [5], suggesting that attackers have adapted to organizations’ cybersecurity improvements [5]. Additionally, the report identified illicit addresses associated with terrorist financing [3], cybercrime [3] [6], and child abuse material [3] [6]. The United States has pledged to crack down on crypto firms that fail to block and report illicit money flows [3] [6]. It is interesting to note that Bitcoin was the top cryptocurrency used by cybercriminals in 2021, but stablecoins have become more dominant in recent years [3], accounting for the majority of illicit transaction volume [2] [3].
Conclusion
The decrease in cryptocurrency flowing into illicit addresses is a positive development, but the report warns that this trend may not continue as more illicit addresses are identified. The significant volume of transactions with sanctioned entities raises concerns about the effectiveness of current sanctions measures. The preference for stablecoins in illicit transactions highlights the need for increased regulation and oversight in the cryptocurrency space. The increase in revenues from ransomware and dark net activity underscores the ongoing challenges in combating cybercrime. The identification of illicit addresses associated with terrorist financing [3], cybercrime [3] [6], and child abuse material highlights the importance of collaboration between law enforcement agencies and cryptocurrency firms. The United States’ commitment to cracking down on crypto firms that facilitate illicit money flows is a step in the right direction. The dominance of stablecoins in recent years as the cryptocurrency of choice for cybercriminals calls for further examination and action to address this issue.
References
[1] https://markets.businessinsider.com/news/currencies/crypto-crime-amounted-to-over-24b-in-2023-chainalysis-1032977136
[2] https://finance.yahoo.com/news/crypto-crime-amounted-over-24b-140000086.html
[3] https://www.tradingview.com/news/reuters.com,2024:newsml_L8N3E83OQ:0-illicit-crypto-addresses-received-at-least-24-2-bln-in-2023-report/
[4] https://www.chainalysis.com/blog/2024-crypto-crime-report-introduction/?ref=upstract.com
[5] https://www.infosecurity-magazine.com/news/illicit-cryptocurrency-flows-drop/
[6] https://www.techtimes.com/articles/300748/20240118/report-24-2-billion-crypto-funneled-illicit-wallets-2023.htm
