According to a recent report by blockchain intelligence firm Chainalysis, crypto scammers have had a disappointing year so far in 2023. The report reveals that inflows to “known illicit entities” have dropped by 65% compared to the same period last year. Additionally, inflows to “risky” entities have decreased by 42%, while inflows to “legitimate services” have only fallen by 28%. This indicates that although the market has experienced a pullback, the decline in illicit crypto transaction volumes is more significant than that of legitimate transactions.
Declining Inflows to Illicit Addresses
The report highlights that inflows to illicit addresses have decreased across almost all categories. The most notable decline is observed in crypto scams, with scammers obtaining $3.3 billion less in proceeds this year compared to the previous year. In total, crypto scammers have managed to pocket approximately $1 billion so far in 2023. This trend is particularly significant considering that crypto prices have generally been rising this year, as opposed to the falling prices of the previous year. This breaks the previous correlation between higher prices and increased scamming activity. However, this decline can be attributed to the cessation of two major scams, VidiLook and Chia Tai, which were operating last year.
Ransomware: A Growing Illicit Activity
While overall crypto-related crime has decreased, one category that has seen growth is ransomware. The report reveals that ransomware attacks have generated $175.8 million more this year compared to the same period last year, marking a reversal in the downward trend observed in the previous year. The report suggests that the decline in ransomware attacks last year may have been influenced by the Russia-Ukraine War, which potentially displaced ransomware operators and diverted their attention away from financially motivated cyber intrusions.
A Positive Outlook for Cyber Security
Chainalysis concludes that 2023 has started positively in terms of cyber security, with a significant decline in crypto crime. This decline signifies that the efforts made by law enforcement agencies and the crypto sector itself have paid off in preventing major hacking incidents, which have been a prominent issue in the crypto space in previous years. The report emphasizes the success of these efforts in creating a safer environment for crypto users and highlights the potential for continued improvement in cyber security measures.
In summary, the Chainalysis report reveals a substantial decrease in crypto scams in 2023 compared to the previous year. While illicit crypto transaction volumes have declined significantly, legitimate transactions have experienced a smaller decrease. This decline can be attributed to the cessation of two large-scale scams. However, ransomware attacks have seen an increase this year, reversing the trend observed in the previous year. Overall, the report paints a positive picture of cyber security in 2023, showcasing the effectiveness of collaborative efforts in combating crypto-related crime.