At least $24.2 billion worth of crypto was sent to illicit crypto wallet addresses in 2023, according to a new report by Chainalysis, a crypto research firm. This includes addresses that are sanctioned by the U.S. or linked to terrorist financing, scams, ransomware, darknet markets, cybercrime, and child abuse material.
According to Chainalysis, the $24.2 billion figure is likely an underestimation and will increase as more illicit addresses are identified. The firm also revised its 2022 estimate of crypto-related crime from $20.6 billion to $39.6 billion, indicating a growing trend of illicit activity involving digital currencies.
The report found that sanctioned entities and jurisdictions accounted for the majority of the illicit transaction volume in 2023, with $14.9 billion or 61.5% of the total. Most of this came from crypto services that are either sanctioned by the U.S. or operate in U.S.-sanctioned jurisdictions where U.S. sanctions are not enforced.
The report also noted that stablecoins that are pegged to fiat currencies or other assets have become more prevalent in illicit transactions in the last two years. Stablecoins now represent the majority of all illicit transaction volume, surpassing Bitcoin, which was the top digital currency used by cybercriminals in 2021.
U.S. And U.N. Vow To Crack Down On Crypto Crime
The report comes as the U.S. and the U.N. have expressed their concerns over the use of digital currencies for illicit purposes. The U.S. has said it will impose stricter regulations on virtual assets firms that fail to block and report suspicious transactions. Last year, the founder of Binance, one of the largest crypto exchanges in the world, pleaded guilty to violating U.S. anti-money laundering laws.
The U.N. also released a report on Monday that said that unregulated virtual assets exchanges have become “foundational pieces” of the financial infrastructure used by organized crime in Southeast Asia. The report warned that crypto-enabled crime poses a serious threat to the region’s security and stability.
The Chainalysis report highlights the need for more cooperation and coordination among governments, regulators, law enforcement, and the crypto industry to combat the growing problem of these emerging crimes. It also urges the public to be more aware and cautious of the risks and challenges associated with digital currencies.
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