The realm of illicit activities involving cryptocurrency is experiencing a notable transformation, as revealed by a recent report published by TRM Labs, a blockchain intelligence firm collaborating with law enforcement agencies. The report, titled "Illicit Crypto Ecosystem Report," highlights a significant shift in criminal behavior, indicating a diversification away from Bitcoin towards other blockchain networks.
In the past, Bitcoin was the primary choice for illicit activities, accounting for a staggering 97% of the total illicit crypto volume in 2016. However, this dominance has diminished significantly over the years. As per the report, Bitcoin now represents merely 19% of all illicit crypto activities in 2022, underscoring its declining prominence in such activities.
TRM Labs' findings shed light on the rise of what they term "multi-chain crime." Criminals have started exploring alternative chains, such as Ethereum, Tron, and Binance Smart Chain, in their illicit pursuits. The report notes a tactic known as "chain-hopping," wherein stolen crypto assets are moved across different chains, enabling money laundering and evading detection. This method has gained popularity among criminals seeking to obfuscate their tracks.
Esteban Castaño, co-founder and CEO of TRM Labs, emphasized the significance of their mission to develop an extensive map of illicit financial flows on various blockchains. He stated, "The shift away from the Bitcoin blockchain towards other blockchains and tactics underscores the importance of our mission to build the industry’s most comprehensive map of illicit financial flows on-chain."
The report also disclosed that approximately $7.8 billion was channeled into various fraudulent schemes related to cryptocurrencies in 2022. Notably, around $2 billion was stolen through hacks targeting cross-chain bridges, which serve as mechanisms for facilitating the transfer of digital assets between different blockchains.
This shift in the landscape of illicit crypto activities highlights the evolving nature of criminal behavior within the blockchain ecosystem. As the dominance of Bitcoin declines, law enforcement agencies and regulatory bodies face the challenge of adapting to new strategies employed by criminals. Understanding and addressing the diversification of illicit activities across multiple chains will be crucial in combating financial crime in the crypto space.