FINTECH: Illicit crypto addresses received at least $24.2 billion in 2023

At least $24.2 billion worth of crypto was sent to illicit crypto wallet addresses in 2023, including addresses identified as sanctioned or linked to terrorist financing and scams, crypto research firm Chainalysis said on Thursday.
Cryptocurrencies enable people to send money around the world without using the mainstream financial system. The underlying blockchain technology creates a record of transactions where senders and receivers are identified only by their wallet addresses, which are a string of letters and numbers.

Chainalysis said the $24.2 billion number is almost certainly an underestimation and will rise as it identifies more illicit addresses. It also said it had doubled its 2022 estimate to $39.6 billion from $20.6 billion.

Chainalysis’ data only includes crypto-related crime. It said it was impossible to determine from blockchain data alone the volume of cryptocurrency that is the proceeds of non-crypto-related crime, for example when cryptocurrency is the means of payment in drug trafficking.
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Instead, the firm counted crypto sent to wallet addresses identified as illicit, plus the volume of funds stolen in crypto hacks.

Chainalysis said sanctioned entities and jurisdictions together accounted for a combined $14.9 billion worth of illicit transaction volume in 2023, which represents 61.5% of all illicit transaction volume it measured on the year.
Of this total, most came from crypto services sanctioned by the U.S. or located in U.S.-sanctioned jurisdictions where U.S. sanctions are not enforced.
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Revenue from crypto scamming and hacking fell in 2023, Chainalysis said, but ransomware and darknet markets saw revenues rise.
Various other types of illicit addresses were identified in the report, including those linked to terrorist financing, cybercrime and child abuse material.

The U.S. has said it will crack down on crypto firms which fail to block and report illicit money flows. Last year, the founder of crypto exchange Binance pleaded guilty to breaking U.S. anti-money laundering laws.

A United Nations report on Monday said that unregulated cryptocurrency exchanges have become “foundational pieces” of financial architecture used by organised crime in Southeast Asia.

Bitcoin was the top cryptocurrency used by cybercriminals in 2021, but stablecoins have become more dominant in the last two years, now accounting for the majority of all illicit transaction volume, Chainalysis said.