Illicit Activity Market Revenue Decline In 2023
American blockchain analysis firm Chainalysis released its detailing the trends and figures that crypto-related illicit activities saw in 2023. The firm’s data shows a significant drop in value received in cryptocurrency addresses used for illicit activities, totaling $24.2 billion.Nonetheless, it’s worth noting that their issuers can trace stablecoins, and funds can be frozen when addresses are linked to illicit activities, as Tether did back in 2023.
Illicit transaction volume by asset type, 2018-2023. Source: Chainalysis
Trends That Defined Crypto-Related Crime In 2023
Chainalysis on-chain metrics suggest that scamming revenues have been trending globally since 2021. Although these crimes are still underreported, “overall, scamming is down, given broader market dynamics.”Romance scams, such as ‘pig butchering,’ are among the most popular crypto scamming tactics used by scammers and are one of the biggest forms of related crime by transaction volume.
Regarding crypto hacking, the firm believes that “the decline in stolen funds is driven largely by a sharp dropoff in DeFi hacking,” it could represent “the reversal of a disturbing, long-term trend.” In 2023, crypto scamming and hacking revenue fell significantly, with the total revenue decreasing 29.2% and 54.3%, respectively. In contrast to the overall trends, ransomware and darknet markets, two of the most prominent forms of related crime, saw revenues rise in 2023. Similarly, 2023’s growth in darknet market revenue comes after a 2022 decline in revenue.The report shows that transactions with sanctioned-related entities and jurisdictions drive most of the illicit activity as entities and jurisdictions move towards using stablecoins and other crypto assets to bypass restrictions.
They accounted for a combined $14.9 billion transaction volume in 2023, representing 61.5% of all illicit transactions over the year. Chainalysis explains that:Most of this total is driven by cryptocurrency services that were sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), or are located in sanctioned jurisdictions, and can continue to operate because they’re in jurisdictions where U.S. sanctions are not enforced.Ultimately, the report addresses that not all sanction-related transactions are due to the illicit use of digital assets, as some of that $14.9 billion volume is related to the average users who reside in the sanctioned jurisdictions.
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