By Elizabeth Howcroft
LONDON (Reuters) – Crypto crime fell overall in the first six months of 2023, but the volume of payments to ransomware attackers surged and is on track for its second-biggest annual total on record, blockchain analytics firm Chainalysis said on Wednesday.
Cryptocurrency prices have gradually risen this year, recovering after a string of bankruptcies at high-profile crypto firms in 2022 pushed down token prices and left investors with large losses.
Crypto inflows to illicit services identified by Chainalysis – which include darknet markets, ransomware actors, malware, scams, fraud shops and child abuse material – hit $2.8 billion in the first six months of 2023, down 65% from $8 billion in the same period last year, Chainalysis said.
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But these figures do not include flows to entities which are subject to global sanctions. Transactions associated with sanctioned entities accounted for 44% of 2022’s record-high $20.1 billion worth of crypto crime, Chainalysis said in January.
Revenue from scams also declined, which Chainalysis said went against the long-standing trend of people being more susceptible to scams in times of rising prices, due to “market exuberance” and “FOMO” (fear of missing out). But there was a rise in the number of people falling for impersonation scams, in which fraudsters pretend to be a law enforcement officer or other authority figure to extort money, Chainalysis said.
Crypto payments to ransomware attackers hit $449.1 million in the first half of 2023, up $175.8 million from the same period last year, Chainalysis said. If this continues, ransomware attackers will have their second best year on record, the analysts added.
“Big game hunting – that is, the targeting of large, deep-pocketed organizations by ransomware attackers – seems to have bounced back after a lull in 2022. At the same time, the number of successful small attacks has also grown,” Chainalysis said.
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Chainalysis’s figures probably under-represent crypto’s role in all crime. For example, they exclude when cryptocurrencies are the proceeds of non-crypto-related crimes, such as when cryptocurrency is used for payment in drug trafficking.
(Reporting by Elizabeth Howcroft; Editing by Sinead Cruise and Mark Potter)
