More than $24 billion worth of cryptocurrencies were received in illicit addresses in 2023, accounting for 0.34% of total transaction volume, blockchain intelligence firm Chainalysis estimated in its annual crypto crime trends report.
The figure is almost 40% lower than that of 2022, but it is only provisional. The $24.2 billion total is likely to increase as more addresses are identified as illicit over time. The total for 2022 now stands at $39.6 billion, but at the time of Chainalysis’s report last year only $20.6 billion had been identified.
Another caveat to the research is the prevalence of transactions with sanctioned entities, which accounted for an overall volume of $14.9 billion (61.5%) in 2023. Some of this $14.9 billion includes transactions from regular users of cryptocurrencies living in sanctioned jurisdictions. After all, not all of the Russian-based Garantex cryptocurrency exchange, which has been sanctioned by relevant bodies in both the US and the UK, uses cryptocurrencies for money laundering and ransomware.
Chainalysis’ report, therefore, highlights a nuanced and evolving landscape in which cryptocurrencies are being used as a means for illicit activity, highlighting the moving target that regulators and law enforcement agencies are dealing with.
In 2023, like the previous year, stablecoins accounted for the majority of illicit transaction volume. Prior to 2022, bitcoin was the cryptocurrency of choice for criminals, accounting for the majority of transaction volume each year from 2018 to 2021. In 2022, however, this has shifted to stablecoins, which account for approximately two-thirds of the volume. This was then repeated in 2023.
According to Chainalysis research, cryptocurrency-related scams and hacks saw significant decreases last year, by 29.2% and 54.3%, respectively. On the other hand, ransomware and darknet activity has increased.
To know more: KPMG Canada partners with Chainalysis to combat cryptocurrency fraud and exploits