2023 started in an overall difficult situation for the cryptocurrency market, which continued throughout the rest of the period. However, the market recovered with increasing bullish sentiment and ended the year on a strong note.
Additionally, new data shows that cryptocurrency fraud and cryptocurrency-related illegal activity decreased in 2023 compared to the previous year.
Illegal activity market revenue decline in 2023
Chainalysis, an American blockchain analysis company, has released the 2024 Crypto Crime Report, which details the trends and numbers of crypto-related illegal activities that occurred in 2023. The company’s data shows that the value received on cryptocurrency addresses used for illegal activities has significantly decreased, reaching a total of $24.2 billion.
This is a significant reduction compared to the latest forecast for 2022 of $39.6 billion. Furthermore, the proportion of total cryptocurrency trading volume related to illegal activities decreased from 0.42% in 2022 to 0.34% in 2023.
According to the report, there appears to have been a shift in the types of assets involved in cryptocurrency-related criminal activity over the past two years, with Bitcoin no longer being the most used asset in most illicit transactions.
Alternatively, as the report states, stablecoins have become a more popular option for crypto assets involved in illegal activities. This increase can be attributed to the recent general increase in the share of stablecoins in all cryptocurrency activity.
The shift to stablecoins has not been seen in all related crimes, with activities such as darknet market sales and ransomware extortion still primarily taking place in Bitcoin.
Nevertheless, it is worth noting that issuers can track stablecoins and funds can be frozen if the address is linked to illegal activities. Tether did so in 2023.
Illicit transaction volume by asset type, 2018-2023. Source: Chainalysis
Trends that will define crypto-related crimes in 2023
Chainarise’s on-chain metrics suggest that fraud revenues are on the rise globally starting in 2021. Although these crimes remain underreported, “overall fraud is decreasing when broader market trends are taken into account.”
Romance scams such as “pig butchering” are one of the most popular cryptocurrency fraud tactics used by fraudsters and one of the largest forms of related crime in terms of transaction volume.
Regarding cryptocurrency hacks, the company believes that “the decline in stolen funds is primarily driven by a sharp decline in DeFi hacks,” which could represent a “reversal of a disturbing long-term trend.” It is said that there is. In 2023, cryptocurrency fraud and hacking revenues decreased significantly, with total revenues decreasing by 29.2% and 54.3%, respectively.
In contrast to the overall trend, the two most prominent forms of related crime, ransomware and darknet markets, experienced increased revenue in 2023. Similarly, the increase in darknet market revenue in 2023 comes after a decrease in revenue in 2022.
The report states that transactions with sanctioned affiliated entities and jurisdictions drive most of the illegal activity, and that entities and jurisdictions are increasingly using stablecoins and other crypto assets to circumvent restrictions. It is shown that.
In 2023, these transactions totaled $14.9 billion and accounted for 61.5% of all illegal transactions for the year. Chainalysis explains:
Most of this total comes from virtual currency services licensed by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) or located in sanctioned jurisdictions and subject to U.S. sanctions. It can continue to operate because it is within the jurisdiction. Not forced.
Ultimately, the report concludes that not all sanctions-related transactions are due to illegal use of digital assets, as some of that $14.9 billion relates to the average user residing in a sanctioned jurisdiction. It points out that.
Bitcoin trading at $41,906.6 on the hourly chart. Source BTCUSDT on TradingView.com
Featured image from Unsplash.com, chart from TradingView.com
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