Illicit Cryptocurrency Transactions Reach $24.2 bn in 2023: Chainalysis Reveals

A staggering $24.2 billion worth of cryptocurrency was funneled into illicit wallet addresses in 2023, cryptocurrency research firm Chainalysis reported on Thursday. The findings included addresses associated with sanctions, terrorist financing, and fraudulent activities.
Bitcoin cryptocurrencyCryptocurrencies, touted for their ability to facilitate global transactions outside traditional financial systems, rely on blockchain technology, which records transactions with users identified solely by alphanumeric wallet addresses.

Chainalysis emphasized that the $24.2 billion estimate is likely conservative, with the figure expected to climb as the firm identifies additional illicit addresses. Notably, the report highlighted a doubling of Chainalysis’ 2022 estimate, now revised to $39.6 billion from the previous $20.6 billion.

The firm’s analysis focused solely on crypto-related crimes, making it challenging to ascertain the volume of cryptocurrency derived from non-crypto-related criminal activities. Chainalysis considered crypto sent to identified illicit addresses and funds pilfered in cryptocurrency hacks for its calculations.

In 2023, sanctioned entities and jurisdictions accounted for a staggering $14.9 billion in illicit transaction volume, constituting 61.5 percent of the total measured by Chainalysis. Most of this illicit activity emanated from crypto services in U.S.-sanctioned jurisdictions where U.S. sanctions lacked enforcement, Reuters news report said.

While revenue from crypto scams and hacking declined, Chainalysis observed a surge in revenues from ransomware attacks and darknet markets during the same period.

The report identified various types of illicit addresses, encompassing terrorist financing, cybercrime, and child abuse materials. The United States, signaling a tough stance, has pledged to crack down on crypto firms failing to curb and report illicit money flows. In a significant development last year, the founder of Binance, a major crypto exchange, pleaded guilty to violating U.S. anti-money laundering laws.

A United Nations report released on Monday underscored the pivotal role played by unregulated cryptocurrency exchanges in the financial architecture of organized crime in Southeast Asia.

In a shift from the dominance of Bitcoin among cybercriminals in 2021, stablecoins have taken center stage over the past two years, constituting the majority of all illicit transaction volumes, as per Chainalysis. The unsettling findings emphasize the growing need for regulatory measures to address the rising tide of illicit activities in the cryptocurrency space.

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