1 Mar 2023

Chainalysis issues the 2023 cryptocurrency crime report

Chainalysis issues the 2023 cryptocurrency crime report, highlighting a surge in illicit cryptocurrency activity, particularly related to sanctions and hacking, with $20.6B used for illegal purposes. Ransomware payments are decreasing due to victims refusing to pay, impacting ransomware actor groups. Money laundering is on the rise, reaching $23.8B in 2022, with concerns about underground services. Cryptocurrency scams and darknet market usage are declining. Sanctions on Russia reveal effective enforcement on crypto exchanges. The report emphasizes jurisdiction and technical constraints’ influence on crypto sanctions’ effectiveness and notes a decrease in ransomware lifespan to 70 days in 2022.

Private US company Chainalysis is a leading company in collecting and analyzing data used on cryptocurrency blockchains. In its annual report on cryptocurrency-related crime, they point out that illicit cryptocurrency volumes reach all-time highs amid a surge in sanctions and hacking.

‘Overall, the share of all cryptocurrency activity associated with illicit activity has risen for the first time since 2019, from 0.12% in 2021 to 0.24% in 2022.’ The company assesses that an equivalent of $20.6B is used for illicit activities.

A big part of that sum comes from the offenses related to the economic sanctions on Russia. This shows that a strict regime of sanctions is efficiently imposed on cryptocurrency exchanges, by the US department of the treasury, and international financial institutions. The report describes methods that are used for money laundering and fund transfers. As a key takeaway, Chainalisys points out that the impact of crypto sanctions depends on the jurisdiction and technical constraints.

Ransomware crypto payments

The report shows a decline in ransomware from 2021. Chainalisys claims that ransomware victims increasingly refuse to pay the ransom money hence pushing the criminals out of this scheme. The report is stating that “meaningful disruptions against ransomware actor groups are driving lower than expected successful extortion attempts” In 2021, the US Office of Foreign Assets Control (OFAC) issued an advisory document about the risk of ‘sanction crimes’ that can rise from ransomware payments. OFAC advises all US companies to report ransomware to the FBI prior to any action. This is also considered to be one of the factors for the drop in ransomware payments. In addition, ransomware lifespan is significantly shorter. From 470 days in 2019, it is down to 70 days in 2022.

Money laundering

The report is stating a rise in money laundering activities from $14.2B in 2021 to $23.8B in 2022. The report is stating ‘underground money laundering services’ are a growing concern. Such groups use private channels on messaging apps to set and organise private transactions that are hard to track.