2023 so far has been a year of “recovery” for cryptocurrency after a chaotic 2022, with prices of digital assets like Bitcoin up over 80% on the year as of June 30, the team at Chainalysis noted.
And that’s not the only “good news” for the industry, Chainalysis writes in a blog post while adding that their data shows that cryptocurrency-related crime is “down significantly this year.”
Chainalysis further revealed that “through the end of June, crypto inflows to known illicit entities – not including inflows to entities that have been sanctioned or subject to special measures – are down 65% compared to where they were at the same time in 2022.”
Inflows to risky entities (made up primarily of mixers and high-risk exchanges) are “down 42%,” the report from Chainalysis mentioned.
As stated in the update, transaction volumes are “down across the board, but declines are much less severe for legitimate services, which have seen just a 28% drop in inflows.”
As explained in the Chainalysis report, there’s been “a market pullback, but illicit crypto transaction volume is falling much more than legitimate crypto transaction volume.”
As noted in a blog post, inflows to illicit addresses “are down in nearly every category, but no form of crypto crime has suffered more than scams.”
Through June, crypto scammers have “taken in nearly $3.3 billion less in 2023 than they did in 2022, for a total of just over $1.0 billion on the year.”
Ransomware, on the other hand, is “the only form of cryptocurrency-based crime on pace to grow in 2023, with attackers having extorted $175.8 million more than they did at the same time in 2022.”
The Chainalysis report also pointed out that this year over year growth “likely means the reversal of the positive downward ransomware trend we saw in 2022.”
As mentioned in the update, cryptocurrency scam revenue “plummets as two of 2023’s biggest scams abruptly disappear.”
Scams are nearly “always the highest-revenue form of cryptocurrency-based crime, and while that’s the case so far in 2023, total scam revenue has plummeted compared to last year.”
Through the end of June, crypto scammers have “pulled in 77% less revenue than they did through June of 2022 — and keep in mind as well that 2022 itself saw a large drop in revenue compared to 2021.”
The report also mentioned that this year’s decline is “arguably more notable because it comes at a time when crypto asset prices are going up.”
The report added that positive price movements “translate to higher scam revenue, likely because increased market exuberance and FOMO make victims more susceptible to scammers’ pitches.”
But 2023’s drastic scam decline “bucks that long-standing trend.”
It’s also worth noting that while crypto scam revenue “is significantly down as a whole, one type of scam has taken a much smaller hit than others.”
The report continued:
“Impersonation scams, in which fraudsters impersonate a law enforcement officer or some other kind of authority figure to extort money from victims, have seen just a 23% decline in inflows so far in 2023, compared to 77% for scams as a whole. Worse yet, the number of individual transfers to impersonation scam addresses has actually increased 49% year over year, suggesting that more people have fallen victim to impersonation scams in 2023, even if the total amount lost is lower. Those data points go to show that even with total scam revenue down, law enforcement and crypto compliance teams can’t rest on their laurels.”
The report also mentioned:
“With the exception of ransomware, Chainalysis data shows that crypto crime as a whole is in sharp decline in 2023. This decrease in inflows to illicit addresses shows that the efforts of both the private and public sectors are paying off — law enforcement pressure appears to be dampening criminal activity, while crypto businesses are doing their part in protecting users from scams and preventing the hacks that have been such an issue in previous years, especially for DeFi protocols. However, the persistent scourge of ransomware demonstrates the need to remain vigilant.”
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