On January 18, Chainalysis, a blockchain analysis firm based in New York, unveiled the introduction of its annual report that examines criminal activity within the cryptocurrency ecosystem. The "2024 Crypto Crime Report" revealed a significant drop in the value of cryptocurrency sent to illicit addresses in 2023 compared to the previous year.
According to the report penned by the Chainalysis team, there was a decrease in the total value of crypto transactions sent to illicit addresses from $39.6 billion in 2022 to $24.2 billion in 2023. The team noted that the proportion of total on-chain crypto transactions associated with illicit activity also fell from an estimated 0.42% in 2022 to 0.34% in 2023. They found that stablecoins were used in approximately 60% of illicit transactions, while Bitcoin accounted for slightly less than 25%. Ether or altcoins were involved in the remaining illicit transactions.
The report further highlighted that transactions linked to sanctioned entities constituted most of the illicit activity, representing $14.9 billion or 61.5% worth of illicit transaction volume in 2023. The Chainalysis team pointed out that many of these transactions are connected to crypto services that have been sanctioned by the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) or operate within sanctioned jurisdictions. They observed that these entities continue operating because their jurisdictions do not enforce U.S sanctions and clarified that not all these transactions are necessarily "nefarious;" some may be a result of "average crypto users" residing in sanctioned jurisdictions.
Chainalysis reported a substantial decline in revenues from crimes involving crypto hacking and scamming in 2023. Revenues from crypto hacks decreased by 54.3%, while those from scams fell by 29.2%. However, they noted an increase in revenues related to crypto ransomware and darknet markets in 2023, following a decrease between 2021 and 2022. The team expressed disappointment at the growth of ransomware revenue, suggesting that "ransomware attackers have adjusted to organizations’ cybersecurity improvements."
Richard Teng, CEO of leading crypto exchange Binance, shared his thoughts on the Chainalysis report in a January 22 post on X. "Despite the headlines we sometimes see, the stats continue to prove that crypto is not a good place for criminals," said Teng.
Chainalysis offers research and data to private and public sector partners in over 70 countries, as stated on the company's website. The data from Chainalysis aids compliance and investigation efforts aimed at combating high-profile criminal activities within the crypto ecosystem. The company was co-founded by Michael Gronager and Jonathan Levin.
