Chainalysis, a blockchain analysis firm, reported a significant reduction in cryptocurrency theft and scams in 2023. The figures were nearly a third lower than those in 2022. The firm’s data estimated that stolen cryptocurrency totaled $24.2 billion in 2023. This accounted for 0.34% of total on-chain transactions, a decrease from 0.42%, or $39.6 billion, in 2022.
The total for 2023 encompassed funds sent to addresses deemed illicit and those lost in hacks. Chainalysis explained that the higher figure in 2022 included $8.7 billion from FTX creditor claims. The analytics firm mentioned in its previous report, “We would hold off on including… FTX… until legal processes played out.” This approach changed following the conviction of FTX founder Sam Bankman-Fried on multiple fraud and conspiracy charges, resulting in the inclusion of FTX’s transactions in the current report.
Besides FTX, several notable incidents were recorded in 2023. The Optimism Network was hacked in August, where cybercriminals stole 4,323.6 ETH, equivalent to around $7 million. In Canada, authorities reported that citizens had lost over $22.5 million due to cryptocurrency scams.
The U.S. Department of Justice (DoJ) also made significant strides in combating crypto crimes. In November, the DoJ charged Zhong Shi Gao, Naifeng Xu, and Fei Jiang with laundering over $10 million in cryptocurrency. If convicted, they face up to 30 years in federal prison. Furthermore, in a collaborative effort, Tether and the DOJ froze $225 million in USDT linked to human trafficking. This operation demonstrated the growing role of crypto firms in regulatory and law enforcement efforts.
Chainalysis also observed a shift in the choice of cryptocurrency for illicit transactions. While Bitcoin was the primary choice through 2021, stablecoins have become more dominant in recent years. However, the firm noted, “that’s changed over the last two years,” with stablecoins now accounting for the majority of all illicit transaction volume.
Despite the decrease in cryptocurrency theft, Chainalysis reported an increase in ransomware and darknet market activities compared to the previous year. The firm further highlighted the role of transactions with sanctioned entities, which accounted for $14.9 billion of the illicit volume in 2023. Some of these transactions involved normal crypto users in sanctioned jurisdictions. This added complexity to efforts to regulate and monitor cryptocurrency usage.
