In 2023, TRM Labs data revealed that illicit crypto volumes decreased by a third from $49.5 billion in 2022 to $34.8 billion. However, the TRON blockchain saw a significant increase in hosting crypto frauds, accounting for 45% of all illicit transactions, up from 41% in 2022. A report from TRM’s blockchain intelligence team highlighted key trends in crypto illicit transactions, showing that criminals handled over $34 billion worth of cryptocurrencies despite a 9% decrease in total illicit funds from 2022 to 2023. The report also noted that the TRON blockchain saw the highest volume of illicit transactions at 45%, followed by Ethereum at 24% and Bitcoin at 18%. Tether (USDT) stablecoin had the largest illicit volume in 2023 at $19.3 billion, with approximately 1.63% of USDT volume linked to illicit activity compared to 0.05% of USDC.
The popularity of the TRON blockchain among perpetrators can be attributed to factors such as low transaction fees and high speed, making it easy and quick to launder funds. The availability of stablecoins like USDT on TRON could also be a contributing factor, with USDT being the currency of choice for terrorist financing entities. Despite the significant illicit activity on the TRON blockchain, 2023 saw a 30% decrease in the volume of illicit funds compared to the previous year. Sanctions volume was the largest driver of this decline, with crypto value linked to sanctioned entities falling by 30% 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, with the average amount compromised in each hack decreasing from $21 million in 2022 to $10 million in 2023.
Many 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. Despite the overall decrease in illicit crypto volumes, the TRON blockchain still remains a hotspot for illicit transactions, highlighting the need for increased regulation and monitoring of activities on the platform. Moving forward, it will be important for blockchain intelligence teams and regulators to continue to monitor and address illicit activities on the TRON blockchain and other platforms to protect investors and uphold the integrity of the cryptocurrency ecosystem.
The significant decline in illicit crypto volumes in 2023 is a positive development for the cryptocurrency industry, as it shows that efforts to combat fraud and illicit activities are making an impact. However, the high volume of illicit transactions on the TRON blockchain indicates that more needs to be done to address security and compliance issues on the platform. Increased awareness and vigilance among businesses, investors, and regulators will be key to reducing illicit activities and protecting the integrity of the cryptocurrency market. By working together to address these challenges, the industry can continue to evolve and grow in a secure and responsible manner.
