2023: Cryptocurrency Illicit Financial Flows on the Rise, Stablecoins Emerge as Criminals’ Top Choice, Bitcoin Remains Preferred by Ransomware
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Chainalysis: Illegal Cryptocurrency Activities Decreased by Nearly 40% in 2023
Stablecoins Become the Primary Tool for Criminals
Chainalysis: Does Not Indicate a Decreasing Trend in Cryptocurrency Crime
Chainalysis: Illegal Cryptocurrency Activities Decreased by Nearly 40% in 2023
Chainalysis
will officially release the 2024 Cryptocurrency Crime Report in February, and a preview version was released on January 18th.
According to the report, the total amount of cryptocurrency theft in 2023 decreased by nearly 40% compared to 2022, reaching $24.2 billion, accounting for 0.34% of total on-chain transactions.
The figure for 2022 was $39.6 billion, and Chainalysis defines “theft amount” to include funds stolen by hackers and sent to illegal addresses.
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Proportion of Illegal Money Flow on the Blockchain
Stablecoins Become the Primary Tool for Criminals
As shown in the chart below, Bitcoin was the preferred choice of criminals until 2021, but the proportion of stablecoins increased significantly in 2022 and 2023.
This contradicts what Dante Disparte, Chief Strategy Officer of Circle, said to CNBC at the World Economic Forum (WEF), claiming that stablecoins provide more applications for everyday transactions, while other highly volatile cryptocurrencies are the preferred choice for criminals.
(
Circle CEO: The U.S. is likely to pass a stablecoin bill, IPO plans cannot be disclosed at this time
)
However, Chainalysis also pointed out that certain forms of illegal activities, such as dark web transactions and ransomware, still primarily use Bitcoin.
Classification of Illegal Money Flow
Chainalysis: Does Not Indicate a Decreasing Trend in Cryptocurrency Crime
Chainalysis specifically mentioned that although they estimate the inflow of funds to illegal cryptocurrency addresses in 2023 to be around $24.2 billion, this is only a lower limit estimate, and the total inflow amount is definitely higher as they collaborate with law enforcement agencies and identify more illegal addresses.
For example, in 2022, Chainalysis initially estimated the illegal amount to be $20.6 billion, and a year later, this number was updated to $39.6 billion, which includes a significant increase in sanctioned addresses.
Another reason is that Chainalysis also included the funds related to fraudulent institutions of FTX in the final total illegal amount in 2022.
Of course, it is difficult to include the money flow of centralized institutions like FTX in on-chain statistics. Chainalysis considers this as an exception, and if similar events are convicted by the court in the future, Chainalysis will still include them in the illegal transaction data.
Chainalysis
FTX
Ransomware
Bitcoin
Stablecoins
Further Reading
Hong Kong Launches Stablecoin Regulation: Enters Public Consultation and Innovative “Sandbox” Program
Frax Finance Invests $20 Million in U.S. Treasury Bonds.
