2023 may have seemed like the Wild West when it comes to crypto hacks, especially when we consider the $200 million Mixin incident in September, the $197 million stolen from Euler Finance in March, or the $126 million Poloniex incident in November.
However, Chainalysis, in a recent report, has highlighted that all of the crypto stolen—or rather, received by hacker addresses dropped by nearly 40% compared to 2022 (which saw $624 million stolen from the Ronin bridge, in what is now known as the biggest def hack of all time)
Let's go over the details of this report, and uncover what Chanalysis has discovered.
In the report, titled "2024 Crypto Crime Trends…", the amount of funds that hacker addresses got in 2023 was $24.2 billion, compared to $39.6 billion in 2022. This Explains where the 38.9% (~40%) decline that Chainalysis mentions comes from.
Chainalysis also notes that the amount stolen may have been due to better laws, law enforcement efforts, and public awareness.
In fact, Chainalysis even highlights a decreasing trend in the amount of stolen crypto through the years, from 2.1% in 2019 to 0.34% in 2023.
This, in turn, leads us to conclude that the altcoin industry is adapting, improving and becoming more mature as more users adopt web3 for various purposes.
One of the biggest criticisms of Bitcoin is that it is "mostly used by criminals and thieves".
One good example is Jamie Dimon, the CEO of JP Morgan, who only this week, called Bitcoin a "pet rock" that "does nothing", and is only used for "fraud, sex trafficking, and Anti-Money Laundering" in an interview with CNBC.
It turns out that this outlook is wrong, and can be proven.
Chanalysis notes that there has been a significant shift in the types of cryptos that the aforementioned criminals use,
While it's true that Bitcoin used to be the "crypto of choice" from 2018 to 2021, stablecoins have now taken over and are the most favoured crypto class between 2022 and 2023.
This, on the one hand, shows that stablecoins are becoming more popular in the crypto ecosystem. However, it also shows that "Stablecoins accounted for 65% of all illicit transaction volume in 2023, up from 59% in 2022 and just 7% in 2019."
The report also points out that different types of altcoin crimes have different preferences for cryptocurrencies.
Because of its anonymity and liquidity, Bitcoin is still mostly used for activities like ransomware extortion and darknet market sales.
However, Stablecoins, being a lot more accessible and convenient, are favoured for crimes like fraud sanction evasion.
Speaking of sanctions, Chanalyss also shows that sanctions had little or no effect in 2023.
In fact, sanctioned entities moved a combined $14.9 billion worth of volume in 2023, which is about 61.5% of the total.
This also means that despite sanctions, illegal entities like mixers, peer-to-peer platforms and mining pools still moved (or helped move) more than half of all the illegal money in crypto throughout 2023.
A good example that Chainalysis notes, is Garantex, a Russia-based crypto exchange that was sanctioned by OFAC in April 2022.
Chainalysis notes that Garantex received $4.7 billion worth of cryptocurrency in 2023. Out of this $4.7 billion, $3.2 billion came from sanctioned addresses.
Overall, the recent report from Chainalysis shows the maturity of the altcoin space but also shows that the altcoin industry still has a long way to go, before it ever becomes a safe and widely adopted niche.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.