Crypto Crime Dropped by 15% in 2022 Due to Bear Market: Report

It’s been a bad year for crypto so far – between large companies going under, a slew of cyberattacks, and – most importantly – the value of assets taking a nosedive, overall legitimate volumes have plummeted by 36% year over year., said Chainalysis.

However, there is a silver lining – the illicit trading volumes have also dropped by 15%, despite the millions laundered from heists on Harmony and other platforms.

Fewer Scams and Darknet Transactions

The decline in illicit crypto trading volumes can largely be attributed to a decrease in large-scale scams. It’s important to note that rugpulls and other nefarious activities perpetuated by scammers tend to thrive in bull markets. 2017, for instance, saw a slew of hastily built crypto projects with no real value receive serious funding from new investors with a bad case of FOMO, only to disappear without a trace.

Bear markets, on the other hand, are off-putting to new investors who might be unable to recognize scams outright. Therefore, it stands to reason that fewer newbies risk falling for bad projects.

As a result, the current year saw around $1.6 billion stolen in scams. While this is by no means an insignificant number, it is 65% lower than the amount swiped in scams between July 2020 and July 2021.

The volume of crypto traded through darknet markets also took a tumble. Crypto exchanged for illicit goods and services dropped by 43% year over year. However, we should not attribute this to a decrease in interest in said goods and services. This decline is probably tied to the shutdown – and subsequent confiscation of over $25 million in assets – of Hydra Marketplace following an operation led by German authorities.

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Therefore, this drop should be assumed to only be temporary, much like the closure of Silk Road in 2013, after which plenty of other darknets eagerly took over a bigger share of the market.

More Hacks, More Illicit Funds

Unfortunately, illicit activities in crypto have seen a rise in another domain, despite the overall drop. Funds stolen from DeFi and exchanges have seen a sharp uptick year over year – $1.9 billion as opposed to $1.2 billion.

With Solana, Axie Infinity, and Nomad, just to name a few, 2022 has shown that many crypto platforms have a long way to go before the claim of security too often bandied about on any crypto-related platform can be taken seriously.

Now that the market seems to indicate a return to stability, only time will tell if the downward trend in cybercrime-related crypto volumes will continue to decrease – or whether stronger markets will bring malfeasants back into business as well.


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