Rise in Crypto Hacks and Ransomware, Decrease in Illegal Crypto Transactions: Chainalysis

A recent report from Chainalysis indicated a reduction in total illicit cryptocurrency transactions in 2024, despite a rise in certain types of criminal activities within the sector. Released on August 15 as part of the mid-year update on crypto crime, the report highlighted an increase in hacking and ransomware incidents.

Part 1 of our mid-year #cryptocrime update is here! Illicit on-chain activity decreased by nearly 20% YTD, but activities involving stolen funds are rising, and ransomware payments are reaching new heights. Read our blog for an in-depth analysis. https://t.co/WRGG91mpFP

— Chainalysis (@chainalysis) August 15, 2024

Chainalysis’ findings showed a 19.6% decline in total illicit crypto transactions, dropping from $20.9 billion in 2023 to $16.7 billion by July 2024.

Spot Bitcoin and Ether ETFs Boost Legitimate On-chain Activities

The introduction of spot Bitcoin and Ether exchange-traded funds (ETFs) in the United States has stimulated legitimate on-chain activities, overshadowing illicit operations. However, this increase in legitimate activity coincides with a troubling rise in certain crypto-related crimes.

Two specific categories, namely stolen funds via hacking and ransomware attacks, have experienced a rise. Notably, the resurgence of hacking in 2024 is particularly alarming. Chainalysis observed a significant increase in the value of stolen assets.

By the end of July, the total value of stolen cryptocurrencies reached $1.58 billion, marking an 84% increase compared to the same timeframe in 2023. Although the number of hacking incidents saw only a slight rise (2.8% year-over-year), the average value stolen per incident increased significantly.

Chainalysis reported that the average amount lost per incident surged by 79.5%, rising from $5.9 million in 2023 to $10.6 million in 2024. This increase is partly attributed to the climbing prices of cryptocurrencies like Bitcoin, which experienced a substantial price rise of approximately 130% – from an average of $26,141 in early 2023 to $60,091 in 2024.

Hackers Shift Focus to Centralized Exchanges

The report also highlighted another concerning trend. After targeting decentralized exchanges (DEXs) for the previous four years, hackers have redirected their focus to centralized exchanges (CEXs) in 2024.

The Japanese DMM exchange, for instance, experienced a $305 million Bitcoin theft in May 2024. This single incident accounted for around 19% of the total value stolen in crypto hacks this year.

Ransomware attacks also escalated in 2024, with Chainalysis reporting a record-setting $75 million crypto payment to the ransomware group Dark Angels in July. This transaction marks the largest single ransomware payment ever documented.

Furthermore, the average size of such payments increased significantly – by 96% compared to 2023 and 335% compared to 2022.

The cryptocurrency sector faced considerable losses in July as hackers stole around $266 million through 16 separate breaches. #Hack #Crypto https://t.co/MNQfWVxa41

— Cryptonews.com (@cryptonews) August 1, 2024

In July alone, hackers stole approximately $266 million through 16 distinct breaches, resulting in significant losses for the crypto sector.

The attack on Indian crypto exchange WazirX on July 18 is particularly notable. This incident alone accounted for over $230 million, or 86.4%, of the month’s total losses.

Other notable victims of July’s crypto hacks included algorithmic protocol Compound Finance ($24 million lost), bridging protocol Li.Fi ($10 million), decentralized AI protocol Bittensor ($8 million), and liquidity provider Rho Markets ($8 million).

In contrast, June recorded a lower loss of $176 million across approximately 20 incidents. This disparity underscores the sharp increase in the value of stolen assets within just one month.

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