The Chainalysis Crypto Crime Report 2023 revealed that illegal crypto use reached a record $20.1 billion in 2022. This number will continue to rise over years to come. Crypto has played a significant role in cybercrime in recent years. Cryptos allegedly provide anonymity and decentralization, making them an attractive option for cybercriminals looking to hide their activities and profits. Here are some ways in which crypto is used in cybercrime:
- Ransomware: Ransomware is malware that encrypts the victim’s files and demands payment in exchange for the decryption key. Cryptocurrencies such as Bitcoin are often the preferred payment method for ransomware operators due to their anonymity.
- Darknet markets: Cryptocurrencies are also used to facilitate transactions on darknet markets, where illegal goods and services are bought and sold. Cryptocurrencies make it difficult for law enforcement agencies to track and trace transactions.
- Money laundering: Cryptos are used to launder money obtained through criminal activities. Criminals can convert their illicit proceeds into cryptocurrencies and then use them to purchase legitimate goods and services or exchange them for other cryptocurrencies to further obscure the origin of the funds.
- Scams and fraud: Cryptos are also used to perpetrate frauds such as broker scams, Ponzi schemes, ICO scams, and phishing attacks. Criminals use cryptocurrencies to collect funds from unsuspecting victims, and the decentralized nature of cryptocurrencies makes it difficult for law enforcement to recover the funds.
While cryptos are not inherently bad, their features have made them attractive to cybercriminals. As such, there is a need for greater regulation and oversight to prevent their misuse in criminal activities.