Despite crypto downturn, illicit activity outpaces legitimate uses

Criminal activity in cryptocurrency was more resilient than legitimate uses despite the downturn in the crypto market in 2022, according to a new report by blockchain data aggregation firm Chainalysis.

See related article: Chainalysis says $2 bln stolen in cross-chain bridge hacks this year, more expected

Fast facts

• Illicit transaction volumes are down just 15% in the year through to July, compared to 36% for legitimate transaction volumes.
• The total crypto market cap fell roughly 44% from the start of the year to just over US$1 trillion at the end of July, according to CoinMarketCap.
• This trend was not consistent across all types of illicit transactions however; the report found total scam revenue for 2022 through to July sits at US$1.6 billion — down 65% lower than July 2021.
• The cumulative number of individual transfers to scams in 2022 reached its lowest point in four years with researchers hypothesizing that new and inexperienced users are declining in the ecosystem along with overall prices.
• Crypto hacks bucked this trend, however, as the report found US$1.9 billion had been stolen from crypto hacks in 2022 through to July, compared to just US$1.2 billion at the same point last year.
• Much of this rise can be attributed to the rise in hacks of decentralized finance (DeFi) protocols, whose open source code can be studied by cyber criminals to find exploitable weaknesses, such as what occurred with the US$191 million cross-chain bridge Nomad hack in early August.

 See related article: Vitalik Buterin says he used Tornado Cash to donate to Ukraine