2024 Comprehensive Crypto Crime Mid-Year Update

2024 Crypto Crime Mid-Year Update

Aggregate illicit activity on-chain has dropped by almost 20% in 2024, indicating legitimate activity is growing faster. However, stolen funds and ransomware attacks are increasing. Stolen fund inflows nearly doubled from $857 million to $1.58 billion, while ransomware inflows rose by about 2%, from $449.1 million to $459.8 million.

Stolen Funds

The average cryptocurrency stolen per heist grew by almost 80%, driven by the rise in Bitcoin’s price, which now accounts for 40% of transaction volume from these thefts. Crypto thieves are increasingly targeting centralized exchanges over DeFi protocols. Advanced criminals, including North Korean IT workers, are using sophisticated social engineering tactics to infiltrate and steal from crypto services.

Ransomware

2024 is poised to set records for ransomware payments, with strains carrying out fewer but more profitable attacks. The largest ransomware payment on record was made this year, with $75 million paid to the Dark Angels group. The median ransom payment for severe strains rose from just under $200,000 in early 2023 to $1.5 million by mid-2024, as attackers target larger businesses and critical infrastructure.

Despite law enforcement disruptions, such as against ALPHV/BlackCat and LockBit, ransomware activity continues. Some affiliates have migrated to less effective strains or started their own, causing a fragmented landscape. While attacks increased by 10%, actual ransom payments have declined by 27%, suggesting better preparedness among victims.

Positive Developments And Evolving Criminal Tactics

Cryptocurrency is gaining mainstream acceptance, with new Bitcoin and Ethereum ETFs and revised accounting rules, but adoption is also increasing among criminals. Inflows to legitimate services are the highest since the 2021 bull market, while those to risky services, such as mixers and non-KYC exchanges, are trending higher than last year.

Rising Trends In Cybercrime

Funds stolen in crypto heists surged, and 2024 is the highest-grossing year for ransomware. Attackers are refocusing on centralized exchanges and using social engineering to steal crypto. Ransomware attacks have become more frequent and lucrative, with some payments reaching record highs, reflecting increasingly sophisticated methods and a focus on high-value targets.

Despite the challenges, the ecosystem shows resilience, with reduced ransom payments and law enforcement actions like Operations Cronos, Duck Hunt, and Endgame playing key roles in combating these crimes. As bad actors persist, disrupting their supply chains remains crucial to curbing crypto-related cybercrime.

Key Findings

1. Overall Decline In Illicit On-Chain Activity: There has been a nearly 20% reduction in aggregate illicit activity on blockchain networks year-to-date. This decrease indicates that legitimate blockchain usage is expanding at a significantly faster rate than illicit activity.

2. Increase In Stolen Funds And Ransomware Inflows: Despite the overall decline, two categories of illicit activities — stolen funds and ransomware — have experienced notable growth. Inflows from stolen funds have nearly doubled, escalating from $857 million to $1.58 billion. Similarly, ransomware-related inflows have risen by approximately 2%, increasing from $449.1 million to $459.8 million.

3. Shift In The Nature Of Illicit Transactions: While the overall volume of illegal transactions has decreased, the growth in stolen funds and ransomware suggests a shift towards more targeted and high-value attacks, reflecting evolving strategies by malicious actors in the digital landscape.

4. Implications For Security And Compliance: The rise in stolen funds and ransomware inflows underscores the need for heightened vigilance and advanced security measures within the blockchain and cryptocurrency sectors. It also highlights the importance of robust compliance frameworks to detect and prevent illicit financial flows.

5. Legitimate Activity Outpacing Illicit Use: The reduction in aggregate illicit activity, combined with the continued growth of legitimate blockchain applications, suggests that the industry is maturing. This shift may be attributed to better regulatory oversight, increased adoption of compliance tools, and greater awareness among participants about the risks of engaging in unlawful transactions.

Read the full report here.

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