TRM Labs Report: Illicit Crypto Funds Decreased By 9% Last Year

Key Points:

• TRM Labs reports a 9% drop in illicit crypto funds from 2022 to 2023, but darknet drug sales rise.
• Scams and frauds will account for 1/3 of crypto crimes in 2023, despite reduced illicit funds due to regulatory pressure.
• Tether (USDT) leads in criminal transactions, with $19.3 billion linked to illicit activities, notably terrorist financing on the Tron blockchain.

A recent report by TRM Labs has shed light on the evolving landscape of illicit activity within the cryptocurrency ecosystem.

Decrease in Illicit Crypto Funds Masks Darknet Drug Sales Surge

Despite an overall decrease of 9% in illicit crypto funds from 2022 to 2023, certain areas have witnessed a surge in criminal activity, notably in the sales of illegal drugs on darknet markets, which spiked from $1.3 billion to $1.6 billion during the same period.

The report, titled “The Illicit Crypto Economy,” delved into the key trends observed throughout 2023. Notably, scams and frauds accounted for nearly a third of all crypto crimes during the year. Despite this concerning statistic, there was a notable decline in the share of illicit crypto funds within the crypto space, although it remains significantly higher than industry estimates.

TRM Labs attributed regulatory pressures to a reduction in volumes of hacked and sanctions-exposed funds. Particularly, the United States intensified efforts, tripling the number of crypto crime-linked entities and individuals subject to sanctions. However, hackers affiliated with North Korea saw a 30% decrease in proceeds, with hack proceeds dropping by over 50% from $3.7 billion in 2022 to $1.8 billion in 2023.

Tether Dominates Criminal Activity in Cryptocurrency Sector

Interestingly, Tether emerged as the most utilized stablecoin for criminal activities in the cryptosphere last year.

Despite an overall decline in illicit transactions within the sector, USDT was linked to $19.3 billion in illicit transactions in 2023, down from $24.7 billion the previous year. Furthermore, TRM Labs highlighted USDT on the Tron blockchain as the currency of choice for terrorist financing entities in 2023.