Crypto-related crime has dropped significantly in 2023 compared to the previous two years, despite ransomware activity rising to unprecedented heights, according to research from Chainalysis.
Data from the Blockchain research firm shows that cryptocurrency inflows to illicit services are down 65% year over year, while inflows to risky services like mixers and high-risk crypto exchanges are down 42% year over year.
The data does not include entities that have been sanctioned or subject to special measures.
Meanwhile, inflows to legitimate services are down just 28% year-on-year, meaning illicit transactions are falling at a significantly faster rate than just the market disadvantage, according to Chainalysis.
ransomware
Based on the data, illicit influx is down in every category of crypto-crime except ransomware, which is already lagging behind the numbers during the 2021 bull run.
Ransomware attackers are expected to steal approximately $898.6 million by the end of 2023 at the current rate of attacks. By 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 attributes the uptick primarily to what it calls “big game hunting,” a term used to refer to ransomware attacks against large entities with significant financial resources.
In addition, the number of smaller attacks has also increased, and these now end successfully more often.
Chainalysis suggests that the 2022 war between Russia and Ukraine likely contributed to the decline in ransomware as many of the organizations that carried out these attacks were forced out of the region.
Ransomware incidents have reached an all-time high this year and have become increasingly sophisticated.
Scam
On the other hand, inflows related to scams have fallen “drastically” in 2023 —
Crypto scam revenues are down 77% compared to 2022, which itself saw a significant year-over-year decline.
Scam revenues fell despite positive price momentum in the market, which has historically caused a spike in revenue as people are more susceptible amid FOMO and “market exuberance”.
According to Chainalysis, the decline is largely driven by the disappearance of two prominent investment-type scams: VidiLook and Chia Tai Tianqing Pharmaceutical Financial Management.
Both appear to have been “exit scammed” and made off with all users’ deposits.
The company said these scams are usually replaced immediately, but that hasn’t been the case so far as industry and law enforcement become more vigilant.
However, the data points to a 49% year-over-year increase in scams, suggesting that people are becoming increasingly vulnerable to falling victim to these types of scams.