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Chainalysis Report: 29% Drop in Cryptocurrency Crime by 2023

The number of illegal cryptocurrencies reported by FTX has risen dramatically after Sam Bankman-Fried’s conviction.

A mysterious hacker at work. Image credit: Shutterstock

The amount of cryptocurrency stolen through scams fell by nearly a third last year compared to 2022, according to advance excerpts from a report Chainalysis will release in full in February. Total illicit revenue fell by more than 54 percent, according to the blockchain analytics firm.

Stolen cryptocurrencies accounted for 0.34 percent of total on-chain transactions in 2023, totaling $24.2 billion, compared to 0.42 percent or $39.6 billion in 2022, Chainalysis said. 2023’s total includes funds sent to companies deemed “illegal” and funds stolen by hackers.

Source: Chainalysis

Chainalysis noted that the 2022 amount is much higher because it includes $8.7 billion in FTX creditor claims.Kadena Mining

The company said, “In last year’s report, we indicated that we would defer the inclusion in our illegal totals of the volume associated with FTX and other companies that went out of business that year due to alleged fraud until the legal process was complete.”

Chainalysis thus included FTX after a jury of nine women and three men found FTX founder Sam Bankman-Fried guilty of seven counts of fraud and conspiracy on Nov. 2.

In August, a credit marketplace on the Optimism Network was hacked and cybercriminals stole 4,323.6 ETH (about $7 million at the time), and in October, Canadian authorities said citizens had lost more than $22.5 million in scams involving cryptocurrencies.

In November, the U.S. Department of Justice accused Zhong Shi Gao, Naifeng Xu and Fei Jiang of laundering more than $10 million. If convicted, the trio faces 30 years in federal prison. In the same month, Chainalysis reported that Tether cooperated with the Department of Justice to freeze $225 million in USDT related to human trafficking.

Chainalysis also emphasized that while Bitcoin is still the number one ranked cryptocurrency, it is no longer the number one among scammers and has shifted to stablecoins.

Chainalysis said, “Bitcoin has been the cryptocurrency of choice for cybercriminals through 2021, likely due to its high liquidity.” The firm said, “But this has changed over the past two years, with stablecoins now accounting for the majority of all illicit trading volumes.” And added that the dominance of stablecoins does not apply to all forms of cryptocurrency-based crime.

Chainalysis said that while the number of stolen cryptocurrencies has declined, revenues from criminal activities, including ransomware and dark web marketplace activity, have increased significantly compared to the previous year.

Massachusetts Senator Elizabeth Warren, a longtime critic of cryptocurrencies, has called on federal regulators to do more to crack down on illegal activity using digital currencies. Last December, Warren said cryptocurrency lobbyists were “undermining” the fight to stop cryptocurrencies from funding terrorism.

“I’m writing about a disturbing new report that says your association and other cryptocurrency interests are ‘demonstrating a not-so-secret weapon: a small army of former defense, national security, and law enforcement officials’ on your behalf to undermine bipartisan efforts in the crypto currency space efforts. Congress and the Biden administration to address the role of cryptocurrencies in funding Hamas and other terrorist organizations,” Warren wrote in a letter to the Blockchain Institute.Jasminer

On Tuesday, the United Nations Office on Drugs and Crime (UNODC) reported an increase in money laundering using online casinos in East and Southeast Asia.

Transnational organized crime in Southeast Asia has grown rapidly in recent years. The first and most profound sign of this change was the growth of cross-border trafficking in synthetic drugs and other commodities, but the situation has changed,” Jeremy Douglas, regional representative for Southeast Asia and the Pacific, said in the UN report. “Major transnational organized crime groups have adopted encryption technology and revolutionized the criminal landscape in the region.”



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