Cryptocurrency-related crime is evolving in 2024, with hackers increasingly targeting centralized exchanges and ransomware attacks reaching new heights, according to a mid-year report from blockchain analytics firm Chainalysis.
Crypto Crime Trends Shift as Hackers Target Exchanges
While overall illicit activity on blockchain networks has dropped by nearly 20% year-to-date, two categories have bucked the trend: stolen funds and ransomware. Inflows from stolen funds nearly doubled to $1.58 billion, up from $857 million in the same period last year. Ransomware inflows rose approximately 2% to $459.8 million.
Notably, Bitcoin accounted for 40% of the total transaction volume associated with these heists, up from 30% last year. This shift appears driven by attackers targeting centralized services that typically trade BTC, such as the $305 million hack of exchange DMM.
This exchange’s example, based on data from the Cyvers report, showed that 3 out of 4 crypto thieves go unpunished, and only 24% of stolen cryptocurrencies are recovered and returned to the victims.
James Toledano, the Chief Operating Officer at Savl
“The surge in Bitcoin’s value may have made crypto more attractive to hackers, but contrary to ChainAnalysis’ recent findings, price is just one small factor,” James Toledano, the Chief Operating Officer at Savl, a self-custodial crypto and Web3 wallet, commented for Finance Magnates.
“Cybercriminals are becoming more technically sophisticated thanks to AI. This powerful tool with huge computing power has been unleashed and is available to anyone, drastically reducing the timeframe for hacking. There is an ‘arms race’ between attackers and defenders and this will only get worse.”
It’s worth noting that the value of funds stolen this year has almost equaled the total for all of 2023. According to a report from Chainalysis seven months ago, last year’s crypto hacking losses amounted to $1.7 billion, dropping by more than half from the $3.7 billion reported in the record year for fraudsters, 2022.
This is also significantly more than what was reported for the first six months of this year by CertiK, which stated that crypto losses amounted to $1.19 billion.
📣 Part 1 of our mid-year #cryptocrime update is here! 🔎 Illicit on-chain activity dropped by nearly 20% YTD, but stolen fund activity is surging and ransomware payments are breaking records. Read our blog for a detailed analysis. https://t.co/WRGG91mpFP
— Chainalysis (@chainalysis) August 15, 2024
Ransomware Payments Surge
Ransomware attacks are on track for a record-breaking year, with 2024 already seeing the largest single payment ever recorded at approximately $75 million to a group known as Dark Angels. The median ransom payment to the most severe strains has spiked from just under $200,000 in early 2023 to $1.5 million in mid-June 2024.
We can confirm that early this year we saw the largest ransomware payment ever at $75M. The “big game hunting” trend we discussed in our 2024 crime report – fewer attacks on larger targets with deeper pockets – is becoming more pronounced. https://t.co/Z0yvg3Zvp2 pic.twitter.com/4FsivojtA5
— Chainalysis (@chainalysis) July 30, 2024
“A large number of new ransomware groups have joined the fray, displaying new methods and techniques to carry out their attacks,” Andrew Davis, the General Counselt at Kiva Consulting, noted.
Despite the increase in attack frequency and severity, there is a silver lining. While ransomware incidents have increased by 10% year-over-year, total payment events have declined by 27.29%, suggesting improved victim preparedness and resilience.
Data on the increasing number of ransomware attacks is also confirmed by ZScaler’s State of Ransomware Report, which stated that in 2023, the frequency of such activities increased by 73%, and the total payout surpassed over $1 billion. The attacks were largely focused on the FX sector and cryptocurrencies.
“Also, it’s vital to note that the percentage of hacks is far lower than with TradFi so we shouldn’t be so quick to demonize DeFi as being rampant with hacks,” added Toledano. In the United States alone, consumers lost $10 billion to financial scammers in 2023.