Crypto ransom attacks rise in first half of 2023, Chainalysis says

Crypto crime fell overall in the first six months of 2023, but the volume of payments to ransomware attackers surged and is on track for its second-biggest annual total on record, according to blockchain analytics firm Chainalysis.

Cryptocurrency prices have gradually risen this year, recovering after a string of bankruptcies at high-profile crypto firms in 2022 pushed down token prices and left investors with large losses.

Crypto inflows to illicit services identified by Chainalysis – which include darknet markets, ransomware actors, malware, scams, fraud shops and child abuse material – hit $2.8 billion in the first six months of 2023, down 65 per cent from $8 billion in the same period last year, Chainalysis said.

But these figures do not include flows to entities which are subject to global sanctions. Transactions associated with sanctioned entities accounted for 44 per cent of 2022’s record-high $20.1 billion worth of crypto crime, Chainalysis said in January.

Revenue from scams also declined, which Chainalysis said went against the long-standing trend of people being more susceptible to scams in times of rising prices, due to “market exuberance” and “FOMO” (fear of missing out). But there was a rise in the number of people falling for impersonation scams, in which fraudsters pretend to be a law enforcement officer or other authority figure to extort money, Chainalysis said.

Crypto payments to ransomware attackers hit $449.1 million in the first half of 2023, up $175.8 million from the same period last year, Chainalysis said. If this continues, ransomware attackers will have their second best year on record, the analysts added.

“Big game hunting – that is, the targeting of large, deep-pocketed organizations by ransomware attackers – seems to have bounced back after a lull in 2022. At the same time, the number of successful small attacks has also grown,” Chainalysis said.

Chainalysis’s figures probably under-represent crypto’s role in all crime. For example, they exclude when cryptocurrencies are the proceeds of non-crypto-related crimes, such as when cryptocurrency is used for payment in drug trafficking.