Cryptocurrency crime to drop 65% in 2023, although ransomware remains prevalent

Illegal financial inflows have declined across all types of cryptocurrency crime except ransomware, which has lagged numbers seen during the 2021 bull run.

Despite a spike in ransomware activity to unprecedented highs, cryptocurrency-related crimes will drop significantly in 2023 compared to the previous two years, according to research by Chainaanalysis.

Cryptocurrency inflows to illicit services fell 65% year-on-year, while risky services such as mixers and high-risk cryptocurrency exchanges saw a 42% drop in inflows, according to the blockchain research firm.

The data does not include entities that have been sanctioned or subjected to special measures.

Meanwhile, inflows into legitimate services are down just 28% year-over-year, according to Chainaanalysis, implying that illicit transactions are falling much faster than just market imperfections.

Ransomware

According to the data, illicit inflows of all categories of cryptocurrency crimes have declined in all categories except ransomware, which has lagged behind numbers seen during the 2021 bull run.

At the current rate of attack, ransomware attackers are expected to have stolen approximately $898.6 million by the end of 2023. In comparison, the crypto industry will lose a total of $939.9 million to ransomware attacks in 2021 and less than $500 million in 2022.

The company largely attributed the rise to what it called "big game hunting," a term used to refer to ransomware attacks against large entities with significant financial resources.

Additionally, the number of small attacks is increasing and tends to be more successful now.

Chainaanalysis suggests that the Russia-Ukraine war of 2022 may have contributed to the decline in ransomware volumes, as it displaced many of the organizations conducting such attacks in the region.

Ransomware incidents are at an all-time high this year, and they're getting more sophisticated.

scam

Scam-related inflows, on the other hand, saw a "sharp" drop in 2023 -

Revenue from cryptocurrency scams is down 77% compared to 2022, which also saw a significant year-over-year drop.

Scam revenues are down despite good market price momentum, which has historically led to skyrocketing revenues as people become more susceptible to FOMO and “market booms.”

According to Chainaanalysis, the drop was largely due to the disappearance of two well-known investment-style scams — VidiLook and Chia Tai Tian Qing Pharmaceutical Finance.

Both companies appear to have suffered "exit scams" and wiped out entire user deposits.

Normally, the scams would be replaced immediately, the company said, but so far that hasn't been the case as the industry and law enforcement have become more vigilant.

However, figures show that impersonation scams are increasing by 49% every year, suggesting people are becoming more and more victims of such scams.