Illicit crypto volumes grow

New data shows that illicit crypto volumes in 2024 were potentially higher than in 2023, while the share of these flows compared to total transaction volume remains below 1%.

Blockchain analysis company Chainalysis estimates that, in 2024, volumes dropped from $46 billion to $40.9 billion. However, these are only initial estimates, and the company says that once more data is incorporated, the number might surpass the $51 billion threshold.

The same might happen with estimates of how significant the share of illicit volume is compared to total on-chain transactions. As it stands now, the figure is 0.14%, compared to 0.61% in 2023. However, the initial data for 2023 was revised from 0.34% to 0.61%, suggesting that the 2024 situation might be worse than currently expected.

But there’s a caveat in this data, as it does not include revenue from non-crypto-native crime, such as traditional drug trafficking and other crimes where crypto may be used as a means of payment or laundering. According to Chainalysis, such transactions are "virtually indistinguishable from licit transactions in on-chain data."

Analysts at the company have also found that stablecoins continue to dominate on-chain crime (63% of all illicit transactions) despite centralized stablecoin issuers having the ability to freeze user accounts, as has been demonstrated on multiple occasions.

"This new reality is part of a broader ecosystem trend in which stablecoins also occupy a sizable percentage of all crypto activity, demonstrated by total growth year-over-year in stablecoin activity of around 77%," Chainalysis said, adding that transactions associated with sanctioned entities have shifted primarily to stablecoins.

However, ransomware and darknet market (DNM) sales remain bitcoin (BTC)-dominated, while scammers and stolen fund launderers use various cryptoassets. Blockchain analysts have also noted that their report did not include the hard-to-track privacy coin Monero (XMR), which is "an increasingly important part of the DNM ecosystem."

Chainalysis has also found that stolen funds increased by approximately 21% year-over-year to $2.2 billion, as both high- and low-tech fraud and scams were prolific in 2024. High-yield investment scams and pig butchering represented the most successful fraud and scam types.

"We have also observed the increasing use of artificial intelligence (AI) in the fraud and scams space, such as in highly personalized sextortion attacks," they added, noting that this trend aligns with broader developments across a range of illicit cybercrimes. Moreover, new services have emerged that leverage AI to bypass know-your-customer (KYC) requirements.