According to research conducted by Chainalysis, crypto-related crime has significantly decreased in 2023 compared to the previous two years, even though ransomware activity has reached unprecedented levels. The data from the blockchain research firm reveals a 65% annual decrease in cryptocurrency inflows to illicit services. Inflows to risky services like mixers and high-risk crypto exchanges were also down by 42% compared to the previous year.
Please note that the data does not include entities that have been sanctioned or those subject to special measures.
Meanwhile, legitimate services experienced a smaller decline of only 28% in inflows year over year. This indicates that illicit transactions are decreasing at a much faster rate beyond just the market drawback, as per Chainalysis.
Ransomware
Based on the available data, every category of crypto-crime shows a decrease in illicit inflows, except for ransomware, which has already surpassed the levels observed during the 2021 bull run.
At the current rate of attacks, it is estimated that ransomware attackers will manage to steal approximately $898.6 million by the end of 2023. In comparison, the crypto industry suffered a total loss of $939.9 million to ransomware attacks in 2021, and less than $500 million in 2022.
The increase in ransomware attacks is primarily attributed to what is referred to as “big game hunting,” targeting large entities with substantial financial resources. Consequently, there has also been a rise in smaller attacks, which are more likely to succeed now.
Chainalysis suggests that the decline in ransomware attacks can be partially attributed to the Russia-Ukraine war in 2022. This conflict has displaced many of the organizations involved in these attacks from the region.
This year has seen a record-high number of ransomware incidents, which have become more sophisticated in nature.
Scams
In contrast, scams associated with cryptocurrency have experienced a significant decline in 2023. Revenue from crypto-related scams has decreased by 77% compared to the previous year, which had already witnessed a notable annual decline. This drop in scam revenue occurred despite the positive price momentum in the market, which historically has led to an increase in revenue as people are more susceptible to scams fueled by FOMO and market excitement.
Chainalysis reports that this decline can be primarily attributed to the disappearance of two prominent investment scams, namely VidiLook and Chia Tai Tianqing Pharmaceutical Financial Management. Both scams are seemingly “exit scammed,” absconding with all user deposits. Typically, such scams are promptly replaced, but the industry and law enforcement’s increased vigilance has prevented this from happening thus far.