The cryptoverse may have enjoyed a quieter 2024 in terms of illicit activities, but leading blockchain analytics firm Chainalysis warns that the calm belies a profound mutation in cryptocrime. In its annual Crypto Crime Report, Chainalysis uncovers the diversifying methods and targets of crypto criminals, painting a picture of an underworld evolving to evade detection and enforcement.
2024: The Illusion of Calm
At first glance, 2024 seemed to offer respite from the crypto crime wave. Chainalysis identified $40.9 billion worth of illicit crypto transactions, a notable drop from the $54 billion and $46 billion seen in 2022 and 2023 respectively. However, the firm cautions that the actual figure likely hovers closer to $51 billion, potentially making 2024 a record year for crypto crime.
In a year, these totals will be higher, as we identify more illicit addresses and incorporate their historical activity into our estimates.
– Chainalysis 2024 Crypto Crime Report
Hacks Remain the Achilles Heel
Cryptocurrency hacks and thefts surged by 21% in 2024, siphoning off at least $2.2 billion. Decentralized finance (DeFi) protocols bore the brunt of these attacks, often exploited through vulnerabilities in smart contracts. However, a shift emerged in the latter half of the year, with centralized services increasingly targeted.
While hacks claimed a significant portion of stolen funds, private key compromises emerged as the dominant theft vector, accounting for a staggering 43.8% of crypto thefts. Chainalysis attributes many of these compromises to North Korean hackers, who have honed their craft of infiltrating developer teams to gain backdoor access.
Ransomware and Darknet Markets Stutter
While ransomware attacks once dominated headlines, 2024 saw a decline in their frequency and profitability. Chainalysis notes that victims are increasingly reluctant to pay ransoms, leading to diminished revenues for ransomware operators despite the hundreds of millions still flowing into their coffers.
Similarly, darknet markets witnessed a slump, generating $2 billion in 2024 compared to $2.3 billion the previous year. The exact cause of this downturn remains unclear, but Chainalysis stresses that it’s certainly not due to the lacklustre effectiveness of OFAC sanctions, a reality even the US Congress has acknowledged.
The Great Criminal Migration
Perhaps the most significant takeaway from Chainalysis’ report is the marked mutation of crypto crime in 2024. As legitimate cryptocurrency usage proliferated, so did the diversity of illicit on-chain activities. Traditional criminal organizations increasingly turned to crypto to facilitate drug trafficking, gambling, intellectual property theft, money laundering, human and wildlife trafficking, and violent crime.
Moreover, the emergence of multi-faceted criminal platforms like Huione Guarantee signals a troubling consolidation of illicit services. Since 2021, Huione and its associates processed over $70 billion in crypto transactions, providing infrastructure for fraud and scams while laundering the proceeds.
Chainalysis warns that the anticipated crypto market resurgence in 2025 could trigger a wave of hacks and scams, urging vigilance as criminals adapt to the evolving landscape.
Key Takeaways
- 2024 saw a drop in total crypto crime volume, but the true figure likely exceeds previous years
- Hacks, especially private key compromises, remain the leading threat to the industry
- Ransomware and darknet markets declined, but still generated substantial illicit revenues
- Crypto crime underwent a profound mutation, with traditional crime migrating on-chain
- Consolidated criminal platforms pose an emerging challenge heading into 2025
As the cryptocurrency industry matures, it’s evident that criminal enterprises are maturing alongside it. Chainalysis’ 2024 Crypto Crime Report serves as a stark reminder that the fight against cryptocrime is far from over. As legitimate adoption rises, the imperative for robust security, regulation, and collaboration only grows stronger. The cryptoverse may be charting an exciting future, but it must remain ever-vigilant against those seeking to exploit its promise for nefarious ends.