Cybercrime on the Rise: 2024 Mid-Year Crypto Crime Report Highlights

According to a recent report by Chainalysis, while overall illicit on-chain activity in the cryptocurrency space has decreased by nearly 20% year-to-date (YTD), specific categories such as stolen funds and ransomware incidents are on the rise.

Key Findings

The report highlights that the aggregate illicit activity on-chain has dropped significantly, suggesting that legitimate activity is growing more rapidly than illicit activity. However, inflows of stolen funds have nearly doubled, increasing from $857 million to $1.58 billion. Ransomware inflows have also risen by approximately 2%, from $449.1 million to $459.8 million.

Stolen Funds

The average amount of cryptocurrency stolen per heist has surged by almost 80%. This increase is partly due to the rise in the price of Bitcoin (BTC), which accounted for 40% of the total transaction volume associated with these heists. Crypto thieves are increasingly targeting centralized exchanges over DeFi protocols, which are less popular for trading BTC. Advanced cybercriminals, including those linked to North Korea, are using off-chain methods like social engineering to infiltrate crypto-related services.

Ransomware

2024 is on track to become the highest-grossing year for ransomware payments. The year has already seen the largest ransomware payment ever recorded at approximately $75 million to the Dark Angels ransomware group. The median ransom payment for severe ransomware strains has spiked from under $200,000 in early 2023 to $1.5 million in mid-June 2024. This suggests that these strains are targeting larger businesses and critical infrastructure providers that are more likely to pay high ransoms.

The ransomware ecosystem has fragmented due to law enforcement disruptions of major players like ALPHV/BlackCat and LockBit. Affiliates have migrated to less effective strains or launched their own, contributing to this fragmentation.

Positive Developments

Despite the rise in specific types of cybercrime, the cryptocurrency ecosystem has seen positive developments. Mainstream acceptance continues to grow, marked by the approval of spot Bitcoin and Ethereum exchange-traded funds (ETFs) in the United States. Revisions to the Financial Accounting Standards Board (FASB)’s fair accounting rules have also been a significant milestone.

Inflows to legitimate services are at their highest since 2021, pointing to continued global adoption of cryptocurrency. Inflows to risky services, primarily mixers and exchanges that do not collect KYC information, are trending higher than last year. However, aggregate illicit activity has fallen YTD by 19.6%, from $20.9 billion to $16.7 billion. These figures are lower-bound estimates based on currently identified illicit addresses and are expected to rise as more addresses are attributed to illicit activities.

Chainalysis has also started including suspected illicit activity in their estimates for certain crime types. This new approach leverages on-chain data and heuristics to identify the suspected category for unknown addresses, which helps refine previous years’ estimates.

Conclusion

Despite the overall decline in illicit transactions, stolen funds and ransomware remain significant concerns. The rise in these activities is often associated with organized groups employing sophisticated cyber infrastructure. Law enforcement and cybersecurity measures need to evolve continually to disrupt these activities. Experts believe that operations like Operation Cronos, Operation Duck Hunt, and Operation Endgame are essential in curbing these activities and signaling that criminal actions will have consequences.

For more detailed information, visit the Chainalysis blog.