Illicit Activity on Chains Expands Beyond Cybercrime to National Threats: Chain Analysis

As cryptocurrency gains mainstream traction, its uses in illegal activities are diverse, going beyond traditional cybercrime. Chinalysis warns that these activities include risks such as national security breaches and consumer exploitation.

Of course, even though these illegal actors operate mainly off-chain, they use on-chain platforms as launderers. This shift has professionalized the on-chain illegal ecosystem, with sophisticated networks and services emerging to facilitate various forms of crypto crime.

Sextortion, KYC bypasses and more by 2024

According to the official press release Chainalysis shared with CryptoPotato, illegal CryptoPotato addresses were found to have received $40.9 billion by 2024, a number that shows a decline. However, this figure is a conservative estimate, limited to the flow of illegal addresses identified to date.

Blockchain analysis suggests the firm expects the final total to be higher, even hinting that 2024 may see the peak of inflows into illicit entities.

“The amount of illicit cryptocurrency in 2024 is predicted to be greater than in 2023. Starting in 2020, our annual estimates of illicit activity – which includes both evidence-based and Chineseization signals data – have grown by an average of 25% between annual reporting periods. Assuming the same growth rate as of now, our 2024 annual total could exceed the $51 billion threshold.

Meanwhile, scams and scams are rampant as investment schemes with high returns in 2024 and pig farming are found to be the most profitable methods.

Artificial intelligence (AI) has become a powerful tool in these plans, enabling hyper-personalized sextortion attacks and supporting broader trends in cybercrime, such as bypassing KYC protocols with AI-powered services. Fraudsters are employing escrow services such as Huione and using crypto ATM scams, which are particularly worrisome because of their impact on elderly victims.

Darknet market revenue in 2023 falls short of 2022

The stolen funds are expected to grow by about 21 percent annually to $2.2 billion by 2024. While decentralized finance (DeFi) platforms accounted for the largest share of stolen funds, centralized services were targeted more frequently in the second and third quarters.

Private key agreements were responsible for 43.8% of stolen cryptocurrency. North Korean hackers stole a whopping $1.34 billion from crypto platforms, accounting for 61 percent of the year's total. Some of these attacks have been linked to North Korean IT personnel hacking crypto and web3 companies and exploiting their networks using advanced tactics, techniques and procedures (TTPs).

Chainalysis also reports that ransomware revenue will remain in the hundreds of millions, even as major law enforcement efforts and a decline in victims' willingness to pay ransoms have weakened the ecosystem. Despite this, 2024 will be a busy year with continued attack volume and some ransomware groups receiving smaller payouts.