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Chainalysis: Illegal Cryptocurrency Activities Decreased by Nearly 40% in 2023
Stablecoins Emerging as the Primary Tool for Crimes
Chainalysis: Does Not Indicate a Decreasing Trend in Cryptocurrency Crimes
Chainalysis: Illegal Cryptocurrency Activities Decreased by Nearly 40% in 2023
Chainalysis will officially release a report on cryptocurrency crimes in 2024 in February, and a preview version was released on January 18th. According to the report, the total amount of cryptocurrency theft in 2023 decreased by nearly 40% compared to 2022, amounting to $24.2 billion, accounting for 0.34% of the total on-chain transactions. In 2022, the figure was $39.6 billion, and Chainalysis defines “theft amount” to include funds stolen by hackers and sent to illegal addresses.
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Proportion of Illegal Funds Flow on the Blockchain
Stablecoins Emerging as the Primary Tool for Crimes
As shown in the graph below, Bitcoin was the preferred choice for criminals until 2021. However, the proportion of stablecoins significantly increased in 2022 and 2023. This contradicts what Dante Disparte, Chief Strategy Officer at Circle, said to CNBC during the World Economic Forum (WEF). He claimed that stablecoins provide more applications for everyday transactions, and other highly volatile cryptocurrencies are the preferred choice for crimes.
(
Circle CEO: The US is Likely to Pass Stablecoin Regulation Bill, IPO Plans Cannot Be Disclosed at the Moment
)
However, Chainalysis also pointed out that certain forms of illegal activities, such as dark web transactions and ransomware, still primarily use Bitcoin.
Classification of Illegal Fund Flows
Chainalysis: Does Not Indicate a Decreasing Trend in Cryptocurrency Crimes
Chainalysis specifically mentioned that although they estimate the inflow of illegal cryptocurrency addresses to be around $24.2 billion in 2023, this is only a lower limit estimation. As they collaborate with law enforcement agencies and identify more illegal addresses, the total inflow amount is undoubtedly higher. For example, in 2022, Chainalysis initially estimated the illegal amount to be $20.6 billion, but a year later, this number was updated to $39.6 billion, including a significant increase in sanctioned addresses.
Another reason is that Chainalysis also included the funds related to FTX-related scam organizations in the final illegal total for 2022. Of course, it is challenging to include the flow of centralized institutions like FTX in on-chain statistics, but Chainalysis considers this as an exception. If similar events are convicted by courts in the future, Chainalysis will still include them in the illegal transaction data.
Chainalysis
FTX
Ransomware
Bitcoin
Stablecoins
Further Reading
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Frax Finance Invests $20 Million in US Treasury Bonds.