The cryptocurrency industry continues to grapple with cybercrimes, with darknet markets standing out as one of the two sectors experiencing a surge in revenue in 2023, as per the latest findings from blockchain analysis firm Chainalysis.
Released on February 29, the Chainalysis “2024 Crypto Crime Report” unveils that darknet marketplaces amassed a minimum revenue of $1.7 billion in 2023.
This marks a recovery from the data of 2022, when authorities dismantled Hydra, the world’s largest darknet marketplace.
Although no single marketplace has replaced Hydra, the report highlights the emergence of smaller marketplaces catering to specific niches and adopting more “specialised roles.”
Mega Darknet Market leads the pack with over $500 billion in crypto inflows.
Nevertheless, the revenue from darknet markets hasn’t yet reached the peak levels observed during the reign of Hydra.
The report forecasts ongoing scrutiny and crackdowns by law enforcement agencies, particularly due to the availability of fentanyl products on many of these platforms.
Eric Jardine, cybercrime research lead at Chainalysis, noted that the phenomenon of “niche darknet marketplaces” vying for market share isn’t new and mirrors trends seen after the closures of platforms like the Silk Road and AlphaBay.
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In addition to the rise in darknet market revenue, 2023 witnessed a doubling of crypto-linked sanctions by the United States Office of Foreign Assets Control (OFAC), totalling 18 sanctions on individuals or entities, all with cryptocurrency addresses tied to them.
Such inflows to sanctioned entities and regions constituted 61.5% of all illicit transaction volume, amounting to $14.9 billion in 2023.
Moreover, the report indicates a shift in crypto-linked OFAC sanctions towards individual actors and groups, moving away from major darknet markets like Garantex and Hydra, as well as mixers like Tornado Cash.
However, amidst these concerning trends, there are some positive indicators. Revenue from crypto-based scams experienced a year-over-year decline, dropping to $4.6 billion in 2023 from $5.9 billion in the previous year.
Nonetheless, new types of scams emerged, including romance scams, which more than doubled in revenue year-over-year, showing an 85-fold increase since 2020.
Jardine highlighted the rising prevalence of romance scams, attributing it to their effectiveness in exploiting victims’ trust over extended periods.
He underscored the importance of vigilance in online interactions and advocated for a collaborative effort among public and private sector entities, as well as individuals, to create a safer digital environment.
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