SecurityBrief Asia logo
Asia's leading source of cybersecurity and cyber-attack news
Story image

Crypto crime: Illicit activity falls with rest of market

 2022 has been a tumultuous year for cryptocurrency markets, with significant price declines across all currencies in May and June. While there's no telling if we've reached the bottom, as of now in early August, prices have been relatively stable for the last month, with Bitcoin holding between $20,000 and $24,000. But what effects has the market downturn had on illicit cryptocurrency activity?

Chainalysis has released its mid-year crime update, with an analysis of illicit activity and why they've reacted the way they have to market conditions

Cryptocurrency transaction volumes this year for both illicit and legitimate entities are tracking behind 2021 through July. Overall, criminal activity appears to be more resilient in the face of price declines: Illicit volumes are down just 15% year over year, compared to 36% for legitimate volumes.

However, Chainalysis says the aggregate data doesn't tell the whole story.

"If we dig into specific forms of cryptocurrency-based crime, we find that some have actually increased in 2022, while others have declined more than the market overall."

Where illicit activity is dropping in 2022

Scams

Total scam revenue for 2022 currently sits at $1.6 billion, 65% lower than where it was through the end of July in 2021, and this decline appears linked to declining prices across different currencies.

Since January 2022, scam revenue has fallen more or less in line with Bitcoin pricing. It's not just scam revenue falling – the cumulative number of individual transfers to scams so far in 2022 is the lowest its been in the past four years.

According to Chainalysis, those numbers suggest that fewer people than ever are falling for cryptocurrency scams.

"One reason for this could be that with asset prices falling, cryptocurrency scams, which typically present themselves as passive crypto investing opportunities with enormous promised returns are less enticing to potential victims. We also hypothesise that new, inexperienced users who are more likely to fall for scams are less prevalent in the market now that prices are declining, as opposed to when prices are rising and they are drawn in by hype and the promise of quick returns."

It's also important to remember that scam revenue is often driven by large outliers, such as PlusToken, which netted over $2 billion from victims in 2019, or Finiko, which netted over $1.5 billion in 2021. So far in 2022, no scams identified thus far are approaching the level of either.

The biggest scam of 2022 so far has netted $267 million worth of cryptocurrency, just 23% of Finikos revenue through the end of July in 2021. However, theres a flipside to this: Since total scam revenue in a given year is so often driven by one or two huge scams, its possible an outlier could emerge or be identified before the end of the year and reverse the trend of declining scam revenue that we currently see.

Darknet markets

Darknet market revenue is also down significantly in 2022, and is currently 43% lower than where it was through July in 2021. Unlike with scams, however, this hasn't been the case for the entire year 2022 darknet market revenue was tracking above 2021 until April, at which point its rate of increase dropped off a cliff. This is almost certainly due to the April 5 shutdown and sanctioning of Hydra Marketplace, which for years had been the predominant darknet market, acting as a hub not just for drug sales, but for sales of hacking tools, stolen data, and money laundering services.

Interestingly, while overall darknet market revenue fell following Hydra's shutdown, the remaining markets saw a significant uptick in the number of individual incoming transfers.

"We suspect that this increase represents Hydra vendors and customers moving their funds to new markets in search of a replacement," says Chainalysis.

"Nevertheless, the decline in darknet market revenue and indeed, cryptocurrency value received by all criminal categories following Hydra's shutdown shows the tangible impact of law enforcements growing ability to fight cryptocurrency-based crime."

Where illicit activity is increasing in 2022: Hacking and stolen funds
No area of cryptocurrency-based crime is bucking the 2022 trend of declining revenue like stolen funds.

Through July 2022, $1.9 billion worth of cryptocurrency has been stolen in hacks of services, compared to just under $1.2 billion at the same point in 2021. This trend doesn't appear set to reverse any time soon, with a $190 million hack of cross-chain bridge Nomad and $5 million hack of several Solana wallets already occurring in the first week of August.
 
Chainalysis says much of this can be attributed to the stunning rise in funds stolen from DeFi protocols, a trend that began in 2021.

"As we've covered previously, DeFi protocols are uniquely vulnerable to hacking, as their open source code can be studied ad nauseum by cybercriminals looking for exploits (though this can also be helpful for security as it allows for auditing of the code), and its possible that protocols' incentives to reach the market and grow quickly lead to lapses in security best practices.

"Furthermore, much of the value stolen from DeFi protocols can be attributed to bad actors affiliated with North Korea, especially elite hacking units like Lazarus Group. We estimate that so far in 2022, North Korea-affiliated groups have stolen approximately $1 billion of cryptocurrency from DeFi protocols."

Additionally, Chainalysis says we shouldn't expect theft to drop based on cryptocurrency market movements the way scamming does as long as crypto assets held in DeFi protocol pools and other services have value and are vulnerable, bad actors will try to steal them.

"The only way to stop them is for the industry to shore up security and educate consumers on how to find safe projects to invest in. Law enforcement, meanwhile, must continue developing their ability to seize stolen cryptocurrency to the point that hacks are no longer worthwhile."

Crime is down but theres still work to be done

"Nobody likes a crypto bear market, but the one silver lining is that illicit cryptocurrency activity has fallen along with legitimate activity, albeit not as sharply," says Chainalysis.

"This is especially encouraging in scams, where the decrease in market hype seems to mean fewer are fooled by scammers, and in darknet markets, where law enforcements shutdown of Hydra Market appears to have dampened the entire sector.

"Still, with huge increases in stolen funds, we cant afford to rest on our laurels. The public and private sectors must continue to work together and hone their ability to fight cryptocurrency-based crime. We look forward to diving deeper on all forms of cryptocurrency-based crime and seeing if current trends hold when we release our 2023 Crypto Crime Report early next year."

Related stories
Top stories
Story image
Cybersecurity
Continuous attack attempts discovered on Atlassian Confluence zero day
Following a coordinated disclosure of a zero-day vulnerability by Volexity in Atlassian Confluence, attackers went wild to exploit it.
Story image
Malware
Mandiant uncovers malware ecosystem deployed on VMware hypervisors and guest systems
Mandiant research has uncovered a novel malware ecosystem that was found deployed on VMware hypervisors and guest systems by an advanced and suspected China nexus threat actor.
Story image
Microsoft
Yubico research finds concerning trends around authentication security practices
A new global survey from Yubico has found that 59% of employees still rely on usernames and passwords as the primary method to authenticate their accounts.
Story image
Malware
Black Lotus Labs discovers new, multipurpose malware
Black Lotus Labs, the threat intelligence team at Lumen, has discovered a new, rapidly growing, multipurpose malware written in the Go programming language.
Story image
Apple
Jamf shows intent to acquire mobile security firm ZecOps
This acquisition positions Jamf to help IT and security teams strengthen their organisation’s mobile security posture.
Story image
Work from home
Jamf showcases new products to simplify and secure work
At the 13th annual Jamf Nation User Conference, the company shared how its continuous product innovation is helping organisations succeed with Apple.
Story image
Network Management
Fortinet introduces enhanced AIOps across its gateways
FortiAIOps builds on Fortinet's rich history of developing artificial intelligence to deliver actionable network insights for self-optimising management.
Story image
Kaspersky
Cybersecurity loopholes prevalent in South East Asia
In terms of the share of vulnerabilities with publicly available exploits, three countries out of top five are located in Southeast Asia.
Story image
Malware
Cybereason delivers nation-state level of protection to enterprises
Cybereason has announced new advancements in Cybereason NGAV that deliver nation-state level protection for organisations of all sizes.
Story image
Virtual Private Network
95% of organisation rely on VPN as threats continue - report
There is a growing number of VPN-specific security threats and a need for Zero Trust security architecture in enterprise-level organisations.
Story image
Threat intelligence
Trellix advances threat intelligence with new research centre
Trellix has announced the establishment of the Trellix Advanced Research Center to advance global threat intelligence.
Story image
Cybersecurity
Macroeconomic headwinds driving security up priority list
Current macroeconomic headwinds are driving security up enterprise’s priority list and reshaping the hardware Security Module market.
Story image
Hybrid Cloud
Hybrid cloud security driving need for deep observability
Gigamon is bringing application and network-level intelligence together to help network, security, and cloud IT operations teams eliminate security blind spots.
Story image
Enterprise
Delinea shares the importance of PAM, partners and security for modern enterprise
Identity-based security is becoming a crucial tool for modern enterprises as they continue to adapt to different working environments.
Story image
Cybersecurity
Best practices for industrial cyber resilience
Operational technology (OT) security is gaining more attention than ever before, but sufficient understanding of what it takes to prevent breaches is still lacking amongst many organisations.
Story image
Malware
Kaspersky uncovers new malicious malware NullMixer
Kaspersky researchers have uncovered a new malware stealing users credentials, address, credit card data, cryptocurrencies, and accounts.
Story image
Cybersecurity
De-risking the innovation cycle – a modern, real-time approach to security
Many organisations see cybersecurity as an inhibitor of innovation, with burdensome protection measures standing in the way of progress and speed.
Story image
Mobile Device Management
How to easily scale your mobile workforce and devices for the peak shopping season
Retailers are under constant pressure to streamline processes and become more efficient while looking for ways to improve customer satisfaction levels.
Aws Marketplace
Learn how to implement a backup and recovery plan for a new generation of Kubernetes-based modern applications
Link image
Story image
Cybersecurity
Employees unsure who to go to to report security incident
A new study shows more than 20% of the untrained global workforce do not know who to contact during a security breach.
Story image
Data Protection
99% of security experts unhappy with tokenisation investment
Cybersecurity experts are looking for a solution that provides the strength of tokenisation while removing the friction that has accompanied it in the past.
Story image
Cybersecurity
Ransomware attacks continue to increase, report finds
Nearly a quarter of businesses have suffered a ransomware attack, with a fifth occurring in the past 12 months.
Story image
Firewall
Forrester names Akamai as web application firewall leader
"We continually monitor and improve our capabilities to defend customers from new threats, while enabling customers to protect evolving attack surfaces."
Story image
Software-as-a-Service
Varonis adds secrets discovery to data classification
The data security firm announces enhancements that detect and remediate overexposed private keys, encryption certificates, API keys, and authentication tokens.
Story image
Artificial Intelligence
Ordr improves security and management of connected devices
It has implemented more than 80 integrations within the Ordr Data Lake while adding security enhancements to accelerate zero trust segmentation.
Story image
Artificial Intelligence
Fortinet advances AIOps to aid the hybrid workforce
"We’re continuing our commitment to AI innovation by delivering AIOps capabilities across our robust portfolio of enterprise networking technology."
Story image
Cybersecurity
StackHawk launches deeper API security test coverage
Expansion of test coverage includes custom scan discovery, custom test scripts and custom test data for REST APIs.
Story image
Malware
Decrease in malware volume, but surge in encrypted malware
The Q2 Internet Security Report found office exploits continue to spread more than any other category of malware.
AWS Marketplace
Whitepaper: A practical guide for mitigating risk in today’s modern applications
Link image
Story image
Ransomware
Delinea updates DevOps security, remote access more seamless
New enhancements include development support on the most recent Mac computers and improved secrets' management usability through automation.
Story image
Cloud
How modern IT architectures are moving beyond network visibility
Dealing with multiple cloud providers makes it difficult to identify security threats and performance bottlenecks and troubleshoot issues.
Story image
Cloud Security
75% of AU companies had cloud security incident in past year
According to new Venafi research, complexity is due to increase, as companies plan to host more applications in the cloud.
Story image
Edge Security
Security practices for modernising the “spaghetti” of on-premises IT
Many organisations are wondering how to securely modernise their workload, often made up of a “spaghetti” of on-premises applications and management consoles.
Story image
Legacy
Trellix enables greater cyber resiliency with extended XDR platform
"Legacy SIEM technology has failed to modernise security operations. We are confident Trellix XDR fills this critical gap.”
Story image
Data Protection
Cloudflare brings Data Localisation Suite to more APAC businesses
This allows any business in these countries to service their data locally while benefiting from the speed, security, and scalability of Cloudflare’s global network.
Story image
IT Training
Six ways to transform your cybersecurity training and influence lasting change
If the goal is to win hearts and minds, formal awareness training can fall short and often doesn’t inspire people to care.
Story image
Software-as-a-Service
Enterprises yet to fully commit to cybersecurity - CompTIA
“Digital transformation driven by cloud and mobile adoption requires a new strategic approach to cybersecurity, but this poses significant challenges."
Story image
Phishing
Vectra Protect team finds Microsoft Teams vulnerability
The Vectra Protect team identified a post-exploitation opportunity in August, allowing malicious actors to steal valid user credentials from Microsoft Teams.
Story image
Cybersecurity
Video: 10 Minute IT Jams - An update from SearchInform
Val Novoselova joins us today to to discuss new trends in the information security space, and how SearchInform is adapting to some of the new trends we are seeing.
Story image
Secure Code Warrior
Secure Code Warrior announces Coding Labs innovation
Coding Labs mechanisms allow developers to move from learning to applying secure coding knowledge more efficiently, leading to fewer code vulnerabilities.
Story image
Cybersecurity
Test your API Security with Infinite API Scanner
The effectiveness of API scanning technology can mean the difference between successful and unsuccessful programming outcomes, and often enterprises and IT leaders struggle to get it right.