Still feeling the effects of the crash in 2022, last year was a year of recovery for the crypto sector but one silver lining for 2023 was the decrease in crypto crime.
Chainalysis revealed that crime within the sector dropped by 39% from $39.6bn in criminal revenue in 2022, to $24.2bn last year. The blockchain analysis firm has attributed this largely due to scams thriving better when “markets are up, exuberance is high, and people feel like they are missing out on an opportunity to get rich quickly”.
Chainalysis notes that the $24.2bn figure will almost certainly be higher one year from now as they identify more losses through criminal activity. As it stands, crypto scam and hacking revenue fell significantly by 29.2% and 54.3% respectively.
In fact, the report reveals that scamming revenues have been trending down since 2021 due to the crypto winter, with more reporting to federal agencies occurring as knowledge and awareness of criminal activity in the crypto sector becomes more mature.
Crypto hacking has become increasingly more difficult for criminals to hide their identity according to the report due to observers being able to quickly identify unusual outflows when hacks occur.
DeFi protocols have improved security practices over the last year with fewer stolen funds occurring. However, activity on ransomware and darknet markets saw criminal revenues rise in 2023.
Despite ransomware revenue declining in 2022, Chainalysis believes this increase is due to criminals adjusting to cybersecurity improvements, as well as for criminals on darknet markets.
Furthermore, the report notes of a new form of tactic criminals are now using that were prevalent that year, that being romance scams.
This form of crypto scam targets individuals building relationships to pitch them fraudulent investment opportunities directly, as opposed to marketing them, making them more difficult to uncover.
Whilst Chainalysis notes that this trend of scam is on the rise in the US, it does not hinder or negate overall scam activity being down in the last year and is confident of romance scams catching the eye of the FBI and other security agencies.