Cryptocurrency Illicit Activity Hits $24.2 Billion in 2023 Cryptocurrency Illicit Activity Hits $24.2 Billion in 2023

Table of Contents

• Stablecoins Dominate Illicit Transactions
• Drop in Scamming But Rise in Romance Scams
• DeFi Hacking on the Decline
• Key Takeaways

Stablecoins Dominate Illicit Transactions

Crypto research firm Chainalysis revealed that at least $24.2 billion worth of cryptocurrency was sent to illicit wallet addresses in 2023, encompassing addresses associated with sanctions, terrorist financing, and scams. The figure is considered a conservative estimate, and Chainalysis expects it to rise as more illicit addresses are identified.

Of that $24.2 billion total, $14.9 billion (61.5%) was connected to sanctioned entities and jurisdictions. While the illicit transaction volume decreased from $39.6 billion in 2022, the overall percentage of crypto transactions tied to illicit activity only slightly declined from 0.42% to 0.34%.

Drop in Scamming But Rise in Romance Scams

Illicit revenue from cryptocurrency scamming and hacking fell by 29.2% and 54.3%, respectively, in 2023. However, Chainalysis observed that romance scams utilizing cryptocurrency have increased, with scammers forming fake relationships to gain victims’ trust before demanding funds.

DeFi Hacking on the Decline

Fewer incidents of decentralized finance (DeFi) platform hacks in 2023 suggest improved security in the sector. However, transactions to sanctioned entities present challenges for crypto platforms under U.S. or U.K. jurisdiction.

The UN Office on Drugs and Crime reported that the Tron-based stablecoin Tether is widely used for money laundering in Southeast Asia. The agency highlighted unregulated crypto exchanges as crucial to the financial systems employed by organized crime in the region.

Chainalysis stated that stablecoins, particularly those on the Tron blockchain, have overtaken Bitcoin as the largest share of illicit transaction volume.

Key Takeaways

Overall, while illicit cryptocurrency activity declined in total volume in 2023, stablecoins have become the preferred method for executing illegal transactions onchain. Improved security has curbed some forms of fraud and hacking but sophisticated romance scams utilizing cryptocurrency are on the rise. Regulators and cryptocurrency platforms face an ongoing challenge in restricting the flow of crypto to sanctioned entities and criminal organizations.

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Cryptocurrency Illicit Activity Hits $24.2 Billion in 2023 appeared first on Althalla.