In 2023, TRM Labs data revealed that illicit crypto volumes decreased by a third from $49.5 billion in 2022 to $34.8 billion. Despite this overall decrease, the TRON blockchain hosted 45% of all crypto frauds in 2023, up from 41% in 2022. TRM’s blockchain intelligence team highlighted key trends in crypto illicit transactions, revealing that criminals handled over $34 billion worth of cryptocurrencies throughout the year. The report, titled “The Illicit Crypto Economy,” also pointed out that almost half of all illicit crypto volume occurred on the TRON blockchain, followed by Ethereum at 24% and Bitcoin at 18%.
One of the contributing factors to TRON blockchain’s popularity among perpetrators could be its low transaction fees and high speed, making it easier and cheaper to launder funds. Additionally, the availability of stablecoins like USDT on TRON may be another factor driving criminal activity. In fact, USDT saw the largest illicit volume last year, with approximately 1.63% of Tether volume linked to illicit activity, compared to 0.05% of USDC. Angela Ang, senior policy advisor at TRM, noted that USDT on TRON is the currency of choice for terrorist financing entities.
Despite the significant damage caused by illicit activities on the TRON blockchain, 2023 witnessed a significant decline in the volume of illicit funds. The total illicit crypto funds decreased by 30% compared to 2022, with sanctions volume being the largest driver of this decline. Crypto value linked to sanctioned entities fell from $25.4 billion in 2022 to $16.2 billion in 2023. Additionally, crypto hacks and exploits saw a dramatic 50% reduction to $1.8 billion in 2023 from $3.7 billion in 2022. On average, every hack in 2023 compromised $10 million, compared to $21 million in 2022.
Various factors likely contributed to the reduction in crypto crime in 2023, including increased vigilance from businesses, fraud awareness among the general public, and pure chance. The report emphasized the importance of ongoing efforts to combat illicit activities in the crypto space and highlighted the need for continued vigilance and collaboration among industry stakeholders. While the decline in illicit crypto volumes is a positive development, it is essential to remain proactive in addressing emerging threats and vulnerabilities in the ecosystem to ensure the security and integrity of the crypto market.
In conclusion, the TRM Labs report provided insights into the changing landscape of crypto crime and highlighted the key trends and developments in illicit transactions in 2023. While the overall volume of illicit funds decreased from the previous year, the prevalence of criminal activity on the TRON blockchain and the use of stablecoins like USDT for illicit purposes raise concerns about the security and integrity of the crypto ecosystem. Continued efforts to combat illicit activities, enhance fraud awareness, and strengthen regulatory measures will be essential in safeguarding the crypto market and protecting investors from potential risks and threats. By staying vigilant and proactive, the industry can work together to address challenges and promote a safer and more secure environment for crypto transactions and investments.
