Crypto Hacks and Ransomware Increase, Illicit Crypto Transactions Decline: Chainalysis

A recent Chainalysis report revealed a decline in overall illicit cryptocurrency transactions in 2024, even as specific types of criminal activities within the sector surged. Released on August 15 as part of the mid-year crypto crime update, the report found that hacking and ransomware attacks were becoming increasingly prevalent.

📣 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

Chainalysis’ data revealed a 19.6% drop in total illicit crypto transactions from $20.9 billion in 2023 to $16.7 billion by July 2024.

Spot Bitcoin and Ether ETFs Drive Legitimate On-chain Activities

The adoption of spot Bitcoin and Ether exchange-traded funds (ETFs) in the United States fueled legitimate on-chain activities, further overshadowing illicit operations. This growth in legitimate activity, however, is occurring alongside a concerning rise in specific crypto-related crimes.

Two categories, in particular – stolen funds through hacking and ransomware attacks – have seen an uptick. Of particular concern is the resurgence of hacking in 2024. Chainalysis noted a substantial increase in the value of stolen assets.

By the end of July, the cumulative value of stolen cryptocurrencies had reached $1.58 billion – an 84% increase compared to the same period in 2023. While the number of hacking incidents only increased slightly (2.8% year-over-year), the average value stolen per hack surged dramatically.

Chainalysis reported that the average amount lost per incident rose by 79.5%, from $5.9 million in 2023 to $10.6 million in 2024. This spike is attributed in part to the rising prices of cryptocurrencies like Bitcoin, which saw a major price jump of about 130% – from an average of $26,141 in early 2023 to $60,091 in 2024.

Hackers Set Sights on Centralized Exchanges

The report also identified another concerning trend. After focusing on decentralized exchanges (DEXs) for the past four years, hackers turned their attention to centralized exchanges (CEXs) in 2024.

The Japanese DMM exchange, for example, suffered a $305 million Bitcoin theft in May 2024. That single incident accounted for approximately 19% of the total value stolen in crypto hacks this year.

Ransomware attacks, meanwhile, intensified in 2024, with Chainalysis reporting a record-breaking $75 million crypto payment to the ransomware group Dark Angels in July. This transaction represents the largest single ransomware payment ever recorded.

Additionally, the average size of such payments increased dramatically – by 96% compared to 2023 and 335% compared to 2022.

👨🏻‍💻 The cryptocurrency sector faced significant losses in July as hackers stole approximately $266 million through 16 separate breaches.#Hack #Cryptohttps://t.co/MNQfWVxa41

— Cryptonews.com (@cryptonews) August 1, 2024

In July alone, hackers stole approximately $266 million through 16 separate breaches, dealing the crypto sector substantial losses.

The July 18 attack on Indian crypto exchange WazirX stands out. This attack alone accounted for over $230 million, or 86.4%, of the month’s total losses.

Other significant victims of July’s crypto hacks included algorithmic protocol Compound Finance ($24 million lost), bridging protocol Li.Fi ($10 million), decentralized AI protocol Bittensor ($8 million), and liquidity provider Rho Markets ($8 million).

June, in contrast, saw a lower loss of $176 million spread across approximately 20 incidents. This difference highlights the sharp increase in the value of stolen assets in just one month.