Estimated $51bn lost to crypto crime in 2024, report finds
Despite an initial year-over-year decline in reported illegal crypto transactions, Chainalysis warns that 2024 may ultimately break records for illicit activity, with total volumes potentially exceeding $51bn (£39bn).
The blockchain analytics firm emphasised that its figures are lower-bound estimates, meaning that real illicit volumes could be much higher as more addresses are identified. In 2023, the original reported total of $24.2bn was later revised to $46.1bn as more criminal transactions came to light.
"A year from now, these totals will be higher, as we identify more illicit addresses and incorporate their historic activity into our estimates," Chainalysis said in its 2024 Crypto Crime Report.
The firm attributes much of the increase to criminal organisations using blockchain-based laundering services, including vendors on platforms like Huione, which provide "on-chain infrastructure and laundering services for high-risk and illicit actors."
Read more: How will AI change the world of scamming? | The Crypto Mile
While the total amount of crypto crime appears to be rising, its share of total crypto transactions is shrinking. The percentage of attributed crypto transactions linked to crime fell to 0.14% in 2024, down from 0.61% in 2023.
However, Chainalysis. warns that this share is likely to rise in the future as more illicit transactions are uncovered. "Based on historical growth rates, we suspect that this number will eventually exceed last year's total as our data attributions improve," the report said.
North Korean-linked cybercriminals stole $1.34 billion in crypto this year, accounting for 61% of all stolen digital assets, according to Chainalysis.
"Private key compromises accounted for the largest share (43.8%) of stolen crypto in 2024, with North Korean hackers stealing more from crypto platforms than ever before," the report stated.
The hackers targeted both decentralised finance (DeFi) and centralised cryptocurrency platforms, shifting their focus throughout the year.
"Some of these events appear to be linked to North Korean IT workers, who have been increasingly infiltrating crypto and web3 companies, compromising their networks, and using sophisticated tactics, techniques, and procedures," Chainalysis said.
Fraud and scams remained a major source of illicit crypto activity in 2024, with high-yield investment scams and 'pig butchering' schemes being the most successful.
Chainalysis also flagged an increase in the use of artificial intelligence (AI) to facilitate scams, including AI-generated sextortion schemes, which use personalised deepfake content to manipulate victims.
The report also mentioned that AI-powered identity fraud was an increasing problem, enabling criminals to bypass Know Your Customer (KYC) checks when opening accounts on exchanges and DeFi platforms.
Fraudsters are also leveraging guarantee services like Huione to build trust with victims, and crypto ATMs are emerging as a new vector for financial crime, particularly elder fraud schemes.
This year, Chainalysis has introduced new methodologies to detect suspicious activity. The Chainalysis Signals tool enables investigators to estimate suspected illicit activity even when direct evidence is unavailable.
"Signals leverages on-chain data and heuristics to identify the suspected category for a particular unknown address or cluster of addresses, with confidence levels ranging from likely to almost certain," the report said.
One of the challenges in assessing crypto crime is how fraud cases like FTX's collapse are categorised. Chainalysis includes $8.7bn in creditor claims against the exchange in its 2022 illicit activity totals, but acknowledges that many cases of financial crime may not be fully reflected in the data.
Read more: What are bitcoin ETNs?
"There are almost certainly many instances where we do not have such confirmation, and therefore the numbers would not be reflected in our totals," the report noted
Chainalysis estimated that annual illicit crypto activity has grown by an average of 25% year-over-year since 2020, and that if that trend holds, 2024's total could exceed $51bn — an all-time high.
While law enforcement and blockchain analytics firms continue to develop more sophisticated tools to track illicit funds, criminals are also adapting.
"As bad actors continue to evolve their tactics, so too will our methods of detecting and disrupting them," Chainalysis said.
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