2023 Crypto Crime Trends: Illicit Cryptocurrency Volumes Reach All-Time Highs Amid Surge in Sanctions
Designations and Hacking.

Every year, we publish our estimates of illicit cryptocurrency activity to demonstrate the power of
blockchains’ transparency – these kinds of estimates aren’t possible in traditional finance – and to
teach investigators and compliance professionals about the latest trends in cryptocurrency-related
crime that they need to know about. What could those estimates look like in a year like 2022? Last
year was one of the most tumultuous in cryptocurrency history, with several large firms imploding,
including Celsius, Three Arrows Capital, FTX, and others — some amid allegations of fraud.
Those allegations make this year’s Crypto Crime Report a bit tricky, as some feel that those
businesses should be treated as criminal enterprises. Ultimately though, we don’t include their transaction
volumes in our measures of illicit activity because our estimates are based solely on on-chain
intelligence — we don’t account for instances where, for example, off-chain bookkeeping may have
been fraudulent. Plus, the bankruptcy and criminal cases associated with these collapses are still
ongoing, so for the time being, we’ll leave questions of criminality to the legal system.
The events of this year have made clear that although blockchains are inherently transparent, the
industry has room for improvement in this respect. There are opportunities to connect off-chain data
on liabilities with on-chain data to provide better visibility, and transparency of DeFi, where all
transactions are on-chain, is a standard that all crypto services should strive to achieve. As more and
more value is transferred to the blockchain, all potential risks will become transparent, and we will
have more complete visibility.
For now though, we’ll continue to focus on illicit activity that can be measured on-chain. Let’s look
at how the market tumult of 2022 affected cryptocurrency-based crime.