Illegal activities decrease in 2022
Research data from Chainalysis from mid-July 2022 on unlawful actions show that the majority of the money used for these operations comes from theft and hacking of cryptoassets in the crypto market. According to the provided data, this year's figures are trending higher than they were last year. In the meantime, the number of victims of cybercrime in this market is decreasing.
According to the Chainalysis analysis, there has been a sharp drop in unlawful activity across the board in the cryptocurrency market, and this decline has also had an impact on the value of the entire traditional market. like the market for cryptocurrencies in particular. However, it's also vital to keep in mind that criminal activity seems to be more resilient; according to the research, its volume fell by only 15% on an annual basis, compared to 36% of legal activity.
In July 2022 compared to July 2021, total revenue from frauds in the cryptocurrency market decreased by 65%, coming to $1.6 billion. However, it is clear that the fall in overall revenue this time is connected to the market value decline of cryptocurrencies, as the value of other cryptocurrencies also experienced a decline.
The graphic below shows that from January 2022, revenue from fraudulent operations has declined in inverse proportion to the price of bitcoin.
Additionally, the total number of remittance fraud incidents that have been reported so far in 2022 have reached their lowest level in the previous four years. On the other hand, it should be emphasized that while scams have dramatically decreased this year due to an increase in awareness among investors and crypto users in general, scams are also expanding and are rapidly becoming more sophisticated in order to trick people.
Contrary to the number of frauds, the number of hacks and the total amount of money stolen have dramatically increased as of July 2022, with the total amount stolen reaching $1.9 billion, up from $1.2 billion at the same time last year.
While the market is in a downturn, the number of hacks doesn't appear to be dropping. Examples from recent events include the $5 million Phantom wallet hack on the Solana network in early August and the $190 million Nomad cross-chain bridge hack. Due to a corresponding rise in the quantity of money taken from DeFi protocols in 2021, the majority of hacks will be achievable. DeFi protocols are extremely susceptible to hacking because they are all open source and hence easily analyzed. thoroughly examined by fraudsters attempting to exploit it (although this can also be useful for improving security as the source code allows software engineers to test source code and fix vulnerabilities).
Additionally, according to Chainalysis, hacker groups associated with North Korea have taken about $1 billion in cryptocurrencies via DeFi protocols so far in 2022.
From the author's point of view, no matter which market people are in, fraud, scams, and hacks are unavoidable. If a user's assets are stored on DeFi protocols, the cross-chain bridge, or other valuable services, the bad guys will obviously exploit those vulnerabilities and steal that asset from the security holes even though the rate of illegal activities in the crypto environment is declining as the price of the entire market is falling. Increasing user knowledge, educating investors about safe projects to invest in, and most importantly enhancing project security are the only ways to prevent and alleviate this problem.
Source: Chainalysis, The Block