Illicit on-chain activity expands to national security threats

As cryptocurrency continues to gain mainstream acceptance, its use in illicit activities has diversified significantly, according to a recent report by Chainalysis.

The blockchain analysis firm warns that illicit on-chain activities now extend beyond traditional cybercrime, posing potential threats to national security and consumer safety.

In 2024, illicit cryptocurrency addresses reportedly received $40.9 billion, although this figure is likely conservative and may rise as more addresses are identified.

Chainalysis anticipates that the total for 2024 could surpass $51 billion, reflecting an ongoing trend of increasing illicit activity since 2020, which has grown by an average of 25% annually.

Fraud schemes have flourished this year, with high-yield investment scams and "pig butchering" becoming particularly lucrative.

Artificial intelligence (AI) has been leveraged by fraudsters to enhance sextortion attacks and bypass Know Your Customer (KYC) protocols.

Additionally, scams involving crypto ATMs have emerged as a major concern, especially affecting elderly victims.

The report highlights that decentralised finance (DeFi) platforms accounted for a significant portion of stolen funds, with private key compromises being responsible for nearly 44% of losses.

Notably, North Korean hackers have been linked to the theft of $1.34 billion from crypto platforms, representing 61% of the total stolen funds for the year.

Despite law enforcement efforts to combat ransomware, revenues from such attacks remain in the hundreds of millions, although victim reluctance to pay ransoms has weakened this ecosystem.