19.6% decline in crypto crime underscores maturation of digital asset ecosystem

In addition to the SEC’s approval of spot Bitcoin ETFs in January and the announcement of stablecoin regulations by the Central Bank of the United Arab Emirates last month, the crypto sector has been boosted by another significant development.

New research from blockchain data firm Chainalysis has shown that while the inflow of cryptocurrencies to legitimate services has reached its highest level since 2021 year-to-date (YTD), total illicit activity has declined by an impressive 19.6 percent from $20.9 billion to $16.7 billion over the same period.

“It is very encouraging to see that criminal activity is becoming a smaller and smaller part of the crypto ecosystem. The growth of legitimate activity outpacing that of illicit activity on the blockchain demonstrates the ongoing transition of cryptocurrencies to the mainstream. Just as with traditional financial systems, illicit activity is unlikely to be completely eradicated. But advanced blockchain analytics tools like those from Chainalysis are enabling law enforcement and businesses to counter the threat more and more effectively. This puts crypto and blockchain on track to revolutionize the exchange of value, much like the internet transformed the exchange of information,” said Eric Jardine, Head of Cybercrime Research at Chainalysis.

Ransomware continues to increase

Although there was a decline in illegal transactions compared to the same period last year, ransomware was a notable exception.

At this time last year, Chainalysis reported cumulative ransomware payments of around $449.1 million through the end of June 2023. This year, researchers recorded a total of $459.8 million in ransoms paid during the same period, putting 2024 on track to be the worst year on record.

Another worrying finding is the explosive increase in maximum ransom payments within a year.

To date, the largest single payment ever recorded was made in 2024, of approximately $75 million, to a ransomware group called Dark Angels. This increase in the maximum payment amount represents a 96 percent growth over 2023 and a 335 percent increase over the maximum payment in 2022.

Bitcoin again in the crosshairs of crypto criminals

After the number of stolen cryptocurrencies fell by 50 percent in 2023 compared to 2022, this year also saw a resurgence in hacker activity.

The cumulative stolen value has already exceeded the $1.58 billion mark in 2024, approximately 84.4 percent higher than the value stolen in the same period last year.

Interestingly, the number of hacker attacks in 2024 only slightly exceeded that of 2023, increasing by only 2.76 percent compared to the previous year.

Much of the change in compromised value is therefore due to rising asset prices, particularly Bitcoin, which accounted for 40 percent of the transaction volume related to the movement of stolen funds following the hack.

This also suggests that crypto thieves are “going back to their roots” by more frequently targeting centralized exchanges rather than favoring DeFi protocols, which are a less popular vehicle for BTC trading.

Attackers, including those with ties to North Korea, are using increasingly sophisticated social engineering tactics – including applying for IT jobs – to steal cryptocurrencies by infiltrating centralized exchanges.

Commenting on the deviation of ransomware and hacks from the general decline in illegal on-chain activity, Jardine said: “These two types of crimes are often committed by organized groups leveraging sophisticated cyber infrastructure. The key to disrupting cybercrime is disrupting their supply chains, including attackers, subsidiaries, partners, infrastructure service providers, money launderers, and payout agents. Since crypto theft and ransomware operations are almost entirely on the blockchain, law enforcement agencies can follow the money with the right solutions to better understand and disrupt the operations of these actors.”

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