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Criminals Prove Loyalty to Crypto Markets

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Criminals Prove Loyalty to Crypto Markets

“Overall, criminal activity appears to be more resilient in the face of lower prices,” the company noted.

That said, he also found that some forms of criminal activity were more resilient to cooling crypto markets than others.

For example, revenue from crypto scams is down about 65% this year. “This decline appears to be related to falling prices in various currencies,” Chainalysis said.

At the same time, the number of people falling victim to crypto scams also appears to be on the decline, he said.

“One reason for this could be that with falling asset prices, cryptocurrency scams – which typically present themselves as passive crypto investment opportunities with huge promised returns – are less attractive. for potential victims,” ​​he said.

Additionally, the number of newbie crypto investors, who may be the most vulnerable to crypto scams, has fallen along with prices, reducing the number of likely victims, he noted.

Conversely, incidents of crypto hacks and theft are on the rise this year, Chainalysis said.

The company reported that an estimated US$1.9 billion worth of cryptocurrency was stolen in hacks in the first seven months of the year, compared to just under US$1.2 billion. at the same time last year.

“Much of this can be attributed to the meteoric rise in funds stolen from DeFi protocols, a trend that began in 2021,” the company said.

“DeFi protocols are particularly vulnerable to hacking because their open-source code can be studied ad nauseam by cybercriminals…and it’s possible that protocols’ incentives to hit the market and scale quickly could lead to breaches of security best practices,” he noted.

Finally, Chainalysis reported that revenue generated in darknet markets is also down around 43% year-to-date.

He attributed the decline mainly to the closure of Hydra Marketplace – the main marketplace for illegal drugs, hacking tools, stolen data and money laundering – in April.

Until Hydra was shut down by German authorities, darknet revenue was higher than a year earlier, the company said.

“Interestingly, while overall darknet market revenue fell following the Hydra shutdown, the remaining markets saw a significant increase in the number of individual inbound transfers,” the company said.

“We suspect this increase represents Hydra suppliers and customers moving their funds to new markets in search of a replacement,” he said. “Nevertheless, the decline in darknet market revenue – and indeed, the value of cryptocurrency received by all criminal categories – following the Hydra shutdown shows the tangible impact of growing law enforcement capacity. to combat cryptocurrency-based crime.”

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