Illicit financial inflows have declined for all types of cryptocurrency crime, with the exception of ransomware, which has fallen behind the numbers seen during the 2021 bull run.
According to research from Chainaanalysis, despite a surge in ransomware activity to unprecedented highs, cryptocurrency-related crime still fell significantly in 2023 compared to the previous two years.
Data from the blockchain research firm showed that cryptocurrency inflows to illicit services fell 65% year-on-year, while inflows to risky services such as mixers and high-risk cryptocurrency exchanges fell 42% year-on-year.
The data does not include entities that have been sanctioned or subject to special measures.
Meanwhile, inflows into legitimate services fell just 28% year-over-year, according to Chainaanalysis, meaning illicit transactions are falling much faster, rather than simply a market flaw.
Ransomware
According to the data, illicit inflows have declined for all categories of cryptocurrency crime except ransomware, which has lagged behind figures seen during the 2021 bull run.
At the current rate of attacks, ransomware attackers are expected to steal approximately $898.6 million by the end of 2023. In comparison, the crypto industry lost a total of $939.9 million to ransomware attacks in 2021 and less than $500 million in 2022.
The company attributed the rise largely to so-called "big game hunting," a term used to refer to ransomware attacks targeting large entities with significant financial resources.
Additionally, smaller attacks are increasing in number and are now often more likely to be successful.
Chainaanalysis suggests that the Russia-Ukraine war in 2022 may have led to a decrease in ransomware, as it displaced many organizations that carried out such attacks in the region.
Ransomware incidents hit an all-time high this year and have become more sophisticated.
Scams
On the other hand, fraud-related inflows saw a “dramatic” decline in 2023—
Revenue from cryptocurrency scams fell 77% compared to 2022, which also saw a significant year-over-year drop in revenue.
The decline in scam revenues comes despite market price momentum, which historically has led to revenue spikes as people are more susceptible to FOMO and “market exuberance.”
According to Chainaanalysis, the decline was mainly due to the disappearance of two well-known investment scams - VidiLook and Zhengda Tianqing Pharmaceutical Finance.
Both companies appear to have fallen victim to an “exit scam” that took away all user deposits.
Normally, the scams are replaced immediately, the company said, but that has not been the case so far as the industry and law enforcement have become more vigilant.
However, data shows that impersonation scams are increasing by 49% every year, indicating that people are becoming more and more vulnerable to falling victim to such scams.
