Chainalysis Reporting 29% Crypto Crime Decline in 2023

Chainalysis Reporting 29% Crypto Crime Decline in 2023

A recent blockchain-based analyst firm Chainalysis disclosure hails FTX for tipping the scale of the illicit crypto amount reported following the Sam Bankman-Fried conviction. Chainalysis says that the crypto amount stolen via scams in 2023 was nearly a third lower than the exploit suffered in 2022. 

Advance excerpts from a report scheduled for publication by Chainalysis in February indicated that illicit revenue was reduced by over 54%. 

Regulators Active to Crackdown Crypto Crime

Chainalysis illustrated that stolen crypto translated to 0.34% of all on-chain transactions last year, amounting to $24.2 billion. The firm illustrated that the illicit revenue declined relative to 0.42% of the on-chain transactions, amounting to $39.6 billion in 2022.  

The $24.2 billion reported in 2023 captured the amount sent to addresses highlighted by Chainalysis as illicit and acquired via exploits. Chainanalysis attributed the higher amount reported in 2022 to the inclusion of $8.7 billion claimed by FTX creditors. 

Chainalysis reflects on the 2022 figures indicating the decision to exclude the transaction volumes tied to the FTX. The decision extended to exclude the claims laid to the firms that collapsed in 2023 following alleged fraudulent circumstances. The freeze would open till the legal processes play out. 

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The inclusion of claims by FTX creditors followed the November 2 decision by the jury where the crypto exchange FTX co-founder was held guilty of the seven charges. The guilty findings for conspiracy and fraud counts prompted Chainalysis to include the FTX claims. 

Chainalysis reports that a credit market hosted on Optimism Network suffered $7 million comprising 4,323.6 Ethereum. Such underscored the vulnerability of credit space particularly, with Canadian authorities confirming citizens lost over $22.5 million to crypto-related scams. 

November saw the US Department of Justice (DOJ) charge Zhong Gao alongside Fei Jiang and Naifeng Xu for the alleged laundering of crypto estimated at $10 million. The trio is facing a 30-year sentence if convicted for the alleged fraud. 

Chainalysis indicated that the DOJ prompted Tether to freeze $225 million in the USDT stablecoin over links to human trafficking.

Chainalysis highlights that though Bitcoin is the largest crypto by market capitalization, scammers are turning away. Instead, the scammers portray a preference for stablecoins. 

Chainalysis indicates that Bitcoin has lost the allure that attracted cybercriminals in 2021, likely due to its higher liquidity. The situation changed in the past two years, with stablecoins now leading in illicit transaction volume. 

The firm indicated that the stablecoin dominance does not account for all crypto-based crimes. Chainalysis suggests that while the crypto amount stolen declined, the criminal activity orchestrated through ransomware and the darknet increased relatively, unlike in 2022. 

Senator Warren Accuse Lobbyists for Hampering Crackdown Targeting Illicit Financing  

The Chainalysis report of rising crypto crime aligns with the argument by Massachusetts Senator Elizabeth Warren urging a crackdown on illicit activities leveraging digital currency. 

The Democrat politician challenged the federal regulators to intensify the crackdown on crypto use in illicit financing. Warren accused the crypto lobbyists in a December note of undermining the fight against digital assets usage in financing terrorism. 

Warren accused the lobbyists of engaging former employees within the defense, security, and law enforcement units in undermining the bipartisan efforts by the Congress and Biden Administration to resolve crypto use in financing Hamas and terrorism. 

Money Laundering Cases Emerge Dominant in Southeast Asia 

Besides the Chainalysis and Warren criticism of crypto, the United Nations Office on Drugs and Crime (UNODC) revealed in a Tuesday, January 16 brief the rise in the money laundering cases leveraging online casinos operating in Southeast and East Asia. 

The UNODC report shows that transnational organized crime transformed rapidly within Southeast Asia. Such changes are evident in the surge in cross-border trafficking featuring synthetic drugs and commodities. 

The regional representative of UNODC within the Southeast Asia and Pacific region, Jeremy Douglas, indicated that transnational organized crime groups are tapping into technology to revolutionize the crime environment. 

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