The crypto industry is still grappling with cybercrimes, and according to a recent report from blockchain analysis firm Chainalysis, darknet markets have seen a rise in revenue in 2023. The “2024 Crypto Crime Report” reveals that darknet marketplaces generated at least $1.7 billion in revenue, marking a recovery from the previous year when the largest darknet marketplace, Hydra, was shut down by authorities. Although no single marketplace has taken Hydra’s place, the report highlights the success of smaller marketplaces that cater to specific niches and have developed more specialized roles. The leading marketplace in terms of crypto inflows is Mega Darknet Market, which received over $500 billion. However, the revenue from darknet markets has not yet reached the levels seen during Hydra’s reign. The report explains that the phenomenon of niche darknet marketplaces competing for market share is not new and has been observed after the closures of other major marketplaces like the Silk Road and AlphaBay.
In addition to the increase in darknet market revenue, 2023 also saw a rise in crypto-linked sanctions imposed by the United States Office of Foreign Assets Control (OFAC). The number of sanctions on individuals or entities doubled, totaling 18, all of which included cryptocurrency addresses. These sanctions accounted for 61.5% of all illicit transaction volume, amounting to $14.9 billion. The report notes that the focus of crypto-related sanctions has shifted from major darknet markets like Garantex and Hydra to groups and individual actors. Notably, the report lists several individuals and groups, including the North Korean hacking group Kimsuky, crypto mixer Sinbad.io, Russian national Ekaterina Zhdanova, and the Gaza-based MSB Buy Cash, who have been linked to crypto-related sanctions.
Despite these concerning trends, the report does present some positive figures. Revenue from crypto-based scams decreased compared to the previous year, with scams generating $4.6 billion in revenue in 2023, down from $5.9 billion in the previous year. However, the report also highlights a rise in new types of scams, including romance scams, which have more than doubled in revenue year-over-year. Data indicates an 85-fold growth in romance scams since 2020. The report suggests that romance scams have the worst impact on victims due to the average payment size. Approval phishing scams also gained prominence in 2023.
Eric Jardine, cybercrime research lead at Chainalysis, attributes the rise in romance scams to their effectiveness and opportunism on the part of scammers. When asked for insights on avoiding scams and navigating crypto-linked cybercrime in 2024, Jardine advises individuals to exercise caution in their online interactions and highlights the importance of identifying the on-chain footprints of scam networks. He also emphasizes the need for collaboration between law enforcement and private sector actors to recover funds stolen from victims. Additionally, Jardine stresses the importance of using services that prioritize security in the decentralized finance space and practicing good digital hygiene, especially in password and seed phrase management.