Illicit crypto activity more resilient than legitimate demand
By Carine Lee
04:00, 26 August 2022
Despite the cryptosphere going through a harsh winter the sector maintains its attractiveness to one sector – illicit users.
According to Chainalysis’ Mid-year Crypto Crime Update report, criminal activity appears to be more resilient in the face of price declines: Illicit volumes are down just 15% year-on-year, compared to 36% for legitimate volumes.
This is not true across the board. Some forms of crypto-based crime have actually increased in 2022, while others declined.
Scams fall in line with crypto values
Total scam revenue for 2022 currently sits at $1.6bn, 65% lower than July 2021, however, the market capitalization of the crypto sector has also fallen by roughly 70% since November.
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BTC to US dollar
Scam revenue has fallen more or less in line with BTC pricing since January. According to Chainalysis, the cumulative number of individual transfers to scams so far in 2022 is the lowest in the past four years.
The report suggests that less enticing crypto returns led to fewer people falling for the crypto scams.
Fewer crypto ‘marks’
It added that inexperienced users who are more likely to fall for scams are also less prevalent now that prices are declining.
A large number of the successful scams were the product of outlier scams like JuicyFields.io and OmegaPro.world.
Both schemes were responsible for over a third of all crypto scams after the first six months of 2022, with JuicyFields.io netting over $270m.
Interestingly, while overall darknet market revenue fell 43% lower than in July 2021 following Hydra’s shutdown, the remaining markets saw a significant uptick in the number of individual incoming transfers.
Hacks on the rise
Through July 2022, $1.9bn worth of cryptocurrency has been stolen in hacks of services, compared with just under $1.2bn at the same time last year.
This trend does not seem to reverse any time soon, with a $190m hack of cross-chain bridge Nomad and $5m hack of several Solana (SOL) wallets already occurring in the first week of August.
SOL to US dollar
Much of this can be attributed to the rise in funds stolen from DeFi protocols since they are uniquely vulnerable to hacking, as cybercriminals go looking for exploits in their open source code, according to Chainalysis.
Much of the value stolen from DeFi protocols can be attributed to bad actors affiliated with North Korea, such as the elite hacking unit like Lazarus Group.
Chainalysis is of the opinion that North Korea-affiliated hackers have stolen approximately $1bn worth of cryptos from DeFi protocols in 2022.
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