Crypto crime on Darknet market increases in 2023, revenue 1.7 billion USD

According to the latest report from blockchain analysis company, Chainalysis, the cryptocurrency industry continues to suffer from cybercrime, with the darknet market being one of two "spaces" with increased revenue in 2023.

Chainalysis's “2024 Crypto Crime Report,” released on Feb. 29, revealed that darknet markets received at least $1.7 billion in revenue in 2023, a sharp increase compared to data in 2022, when authorities shut down the world's largest darknet market, Hydra.

While no single market will replace Hydra, the report reveals that smaller markets are thriving by serving niche markets and developing more “specialized roles.” Chainalysis highlights Mega Darknet Market leading with over $500 billion in crypto capital flows.

However, the revenue generated from the darknet market has not yet returned to its peak level like during Hydra's time.

“We hope law enforcement agencies will continue to investigate and crack down on darknet markets, especially as there are many places openly selling fentanyl products.”

Eric Jardine, head of cybercrime research at Chainalysis, said that the proliferation of "new darknet markets" is not new, especially after the government shut down darknet markets such as Silk Road and AlphaBay.

In addition to a sharp increase in darknet market revenue, 2023 also saw cryptocurrency-related sanctions by the Office of Foreign Assets Control (OFAC) in the United States more than double, with a total of 18 sanctions against individuals or organizations.

Cryptocurrency flows to sanctioned entities and jurisdictions accounted for 61.5% of total illicit transaction volume, or $14.9 billion in 2023.

According to the report, in 2023, cryptocurrency-related OFAC sanctions shifted to groups, individuals as well as major darknet markets such as Garantex, Hydra and mixers such as Tornado Cash.

The list of individuals sanctioned in connection with cryptocurrency includes North Korean hacker group Kimsuky, mixer Sinbad.io, Russian national Ekaterina Zhdanova and Gaza-based MSB Buy Cash.

However, the report presented more positive figures, including a decline in annual revenue from scams in the crypto space.

Although fraud remains one of the biggest drivers of cryptocurrency-related crime, with $4.6 billion in revenue in 2023, this is down from $5.9 billion the year before.


Fraud revenue in the crypto space from 2019 to 2023 | Source: “2024 Crypto Crime Report” – Chainalysis

However, 2023 sees a rise in new types of scams, including romance scams – the act of using fake identities to go online, seeking the affection and trust of victims. These types of scams have more than doubled their revenue year-on-year, with an 85-fold growth since 2020.

Chainalysis's report estimates that romance scams have the "worst impact on victims" due to the medium scale of the scam. According to the report, 2023 also saw an increase in phishing attacks.


Average scale by type of scam | Source: “2024 Crypto Crime Report” – Chainalysis

Jardine said romance scams are on the rise because “they appear to be effective and are profitable for the scammers.”

“Scammers often take weeks or months to gain their victims' trust. Users are not aware of the signs to detect scams and can easily become victims."

When asked for any insights to help users prevent and tackle crypto-related cybercrime in 2024, Jardine said:

“Creating a safer and more trustworthy online environment requires the collective action of many public and private sector actors, as well as individuals themselves.”

In the case of fraud, “individuals can help mitigate risk by being vigilant in their online interactions,” while other actors in the ecosystem can help identify the on-chain footprint of scammers. fraud networks; Law enforcement may take legal action and with private sector actors to attempt to recover stolen funds from victims.”

Jardine also emphasized the importance of using security services in the decentralized finance space.

“A good digital foundation, especially learning how to manage passwords and seed phrases, is also very important for investors to keep in mind.”