Chainalysis: Ransomware Payments Continue to Rise Despite Overall Decline in Illicit Crypto Activity

New research by Chainalysis, the blockchain data company, has shown that while the year to date (YTD) flow of crypto funds to legitimate services has reached their highest levels since 2021, while aggregate illicit activity over the same period fell by an impressive 19.6 per cent

The crypto sector has received another boost, with new research from blockchain data company Chainalysis showing a rise in legitimate service crypto fund flows and a decline in illicit activity.

According to the findings, while the year-to-date (YTD) flow of crypto funds to legitimate services has reached its highest levels since 2021, aggregate illicit activity over the same period fell by an impressive 19.6 per cent, dropping from $20.9bn to $16.7bn.

This marks a significant shift away from illicit activity, which was at an all-time high in 2023.

“It is highly encouraging to see that criminal activity continues to become an ever-shrinking share of the crypto ecosystem,” said Eric Jardine, Cybercrime Research Lead at Chainalysis.

“The growth of legitimate activity outpacing that of illicit activity on-chain demonstrates the continued transition of cryptocurrencies to the mainstream.

“Just as with traditional financial systems, it is unlikely that illicit activity will be entirely eradicated.

“But advanced blockchain analysis tools, such as those provided by Chainalysis, are empowering law enforcement agencies and enterprises to counter the threat ever more effectively.

“This places crypto and blockchain on track to revolutionise the exchange of value, much like the internet did for the exchange of information.”

However, the research also highlighted some concerning trends, including the continued rise in ransomware payments, which reached a record high in June.

At this point last year, Chainalysis reported cumulative ransomware payments of around $449.1m through the end of June 2023.

This year through the same period, the researchers recorded a total of $459.8m in ransoms paid, setting 2024 firmly on track to be the worst year on record.

Another concerning finding is the ballooning of the maximum ransom payment observed in a given year.

Thus far, 2024 saw the largest single payment ever recorded at approximately $75m to a ransomware group known as Dark Angels.

This increase in the maximum payment size signifies a 96 per cent year-over-year (YoY) growth from 2023 and a 335 per cent rise compared to the maximum payment in 2022.

Bitcoin (BTC) is also back in the crosshairs of cryptocriminals, with a resurgence in hacking activity.

After a 50 per cent drawdown in crypto value stolen in 2023 compared to 2022, this year has seen a return to crypto heists.

The cumulative value stolen YTD in 2024 has already crested $1.58bn, which is around 84.4 per cent greater than the value stolen over the same period last year.

Interestingly, the number of hacking incidents in 2024 has only marginally outpaced that of 2023, rising at just 2.76 per cent YoY.

Much of the change in the value compromised, therefore, is attributable to rising asset prices, particularly Bitcoin which accounted for 40 per cent of the transaction volume associated with the post-hack movement of stolen funds.

This also suggests that crypto thieves are ‘returning to their roots’ by targeting centralised exchanges with greater frequency rather than prioritising DeFi protocols, which are less popular vehicles for trading BTC.

“While overall illicit activity has declined in 2024 compared to last year at this time, ransomware and crypto heists continue to pose significant threats to the crypto ecosystem,” Jardine added.

“Both types of crime are highly impactful, with the former leading to the theft of nearly $460m in ransoms paid through June and the latter seeing over $1.5bn in crypto stolen from exchanges and other centralised services.

“Moreover, attackers, including those linked to North Korea, are pivoting to new tactics, such as applying for IT jobs, to infiltrate centralised exchanges and steal crypto.

“These tactics are concerning and highlight the need for exchanges to bolster their defences against both internal and external threats.”

Commenting on the divergence of ransomware and hacks from the overall decline in illicit on-chain activities, Jardine said, “These two types of crime are often perpetrated by organised groups that leverage sophisticated cyber infrastructure.

“The key to disrupting cybercrime is disrupting its supply chains, including attackers, affiliates, partners, infrastructure services providers, launderers, and cashout points.

“Because the operations for crypto heists and ransomware operate almost entirely on the blockchain, law enforcement armed with the right solutions can follow the money to better understand and disrupt these actors’ operations.”

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