Crypto Scams Plummet 20% Year to Date: Chainalysis

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Recent reports by blockchain data firm Chainalysis, indicate that aggregate illicit activity on blockchain networks this year has decreased by nearly 20%. This decline suggests that legitimate transactions are growing faster than illegal ones, a positive sign for the ongoing maturation of the cryptocurrency ecosystem.

The overall reduction in illicit on-chain activity reflects the increasing adoption of blockchain technology by legitimate businesses and individuals. This trend also underscores the effectiveness of enhanced regulatory measures and improved security protocols which have likely contributed to the decline in illicit activities.

Stolen Funds and Ransomware Attacks on the Rise

However, despite this general decrease, the report showed that two specific types of illegal activity have bucked the trend: stolen funds and ransomware. These categories are seeing an uptick, which raises concerns even as other forms of illicit activity wane.

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According to Chainalysis, stolen funds inflows have increased from $857 million to $1.58 billion, while ransomware inflows surged by approximately 2% from $449.1 million to $459.8 million. 

The rise in stolen funds by almost 80% since January, points to the persistence of sophisticated cybercriminals exploiting vulnerabilities in blockchain systems and centralized exchanges. Similarly, ransomware attacks, where malicious actors encrypt a victim’s data and demand cryptocurrency payments for release, have also surged. This year, the ransomware payment recorded about $75 million to the Dark Angels ransomware group.

Chainalysis Unveils a Project to Combat Crypto Scams

Last month, Chainalysis unveiled Operation Spincaster, an international project, to eradicate “approval phishing” frauds that have deceived victims of $2.7 billion in cryptocurrencies since May 2021. Operating with the Calgary Police Service, Operation Spincaster continues an earlier initiative known as Operation Disruption.

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To handle crypto-related criminality, this project gathered multiple Canadian law enforcement organizations and crypto companies in a workshop. Meanwhile, Operation Spincaster turned into a sequence of operational sprints between April and June, meant to disrupt and stop scams by public-private cooperation.  Chainalysis underlined that blockchain openness and sophisticated analysis create many chances for research, asset recovery, and crime prevention.

Authorities Move to Protect Citizens From Cyber Attacks

Recall that in 2022, the United States Treasury’s Office of Foreign Assets Control (OFAC) sanctioned individuals, entities, and addresses associated with a ransomware group with ties to Iran’s Islamic Revolutionary Group Corps (IRGC). This sanction continued a series of actions by the regulator to protect U.S. citizens from cyber crimes.

Meanwhile, this news followed the sanction of crypto mixer Tornado Cash by the regulator over the laundering of $7 billion. Also, a 29-year-old Russian was repatriated to the United States from the Netherlands to face trial over a ransomware attack that happened in 2020.

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