New report: The 2023 Illicit Crypto Economy

In 2023, illicit actors handled over USD 34 billion worth of cryptocurrencies.

Our latest report, The Illicit Crypto Economy, takes a deep-dive into the major trends we saw emerge and evolve in the crypto space in 2023. This report is an invaluable resource for law enforcement and regulatory bodies, financial institutions, and crypto businesses alike who need to better understand the industry and stay ahead of growing threats—delivered by TRM Labs’ specialized threat intelligence team and synthesized from trillions of data points.

This ongoing prevalence and complexity of criminal cryptocurrency activity underpins the importance of blockchain intelligence solutions like TRM Labs. And as crime categories like darknet drug sales and terrorist financing become increasingly more prevalent on blockchains, specialists in both the public and private sectors need to stay vigilant—and informed—to effectively fight crypto-based crime.

Report highlights

The findings of the The Illicit Crypto Economy 2023 report reveal that:

1. Total illicit volumes are down

We saw a significant reduction in the total volume of illicit funds within the cryptocurrency ecosystem, decreasing by nearly one-third from USD 49.5 billion in 2022 to USD 34.8 billion in 2023. The share of illicit funds as a proportion of all crypto value also fell, from 0.70% in 2022 to 0.63% in 2023.

2. Sanctioned volumes plummeted

Sanctions drove the biggest fall in illicit crypto funds in 2023, with the value of crypto assets linked to sanctioned entities falling from from USD 25.4 billion in 2022 to USD 16.2 billion in 2023.

3. Proceeds from hacks halved

While the total number of hacks around the world remained largely unchanged, there was a significant reduction in the amount of crypto lost to hacks: USD 1.8 billion in 2023, down from USD 3.7 billion in 2022. 

4. Overall volumes of scams and fraud declined

The amount of cryptocurrency sent to addresses linked to scam and fraud schemes decreased by USD 1.5 billion year over year, falling 11% from USD 13.9 billion in 2022 to 12.5 billion in 2023. Ponzi and pyramid schemes were the largest subcategories of fraud in 2023.

5. Fentanyl growth rates dropped

The growth rate in crypto-denominated sales by online vendors specializing in fentanyl dropped by about 150 percentage points in 2023. However, total volumes of fentanyl precursor sales still grew by over 97% year over year, from USD 16 million in 2022 to USD 33 million in 2023. 

6. Illicit drug sales remain robust

Sales of illicit drugs on darknet marketplaces (DNMs) grew to USD 1.6 billion in 2023 (up from USD 1.3 billion in 2022), indicating little impact from the general crypto crime downturn.

7. Almost half of all illicit crypto volume occurred on TRON

The TRON blockchain (TRX) hosted 45% of all illicit volume in 2023—up from 41% in 2022. This was followed by Ethereum at 24%, and Bitcoin at 18%.

8. Tether dominated terrorist financing

While cash, hawala, and traditional money services remain the default tools for terrorism financing, our research found a growing interest in crypto by terrorist groups and their supporters. And among cryptocurrency addresses linked to terror financing campaigns, we saw a 125% increase in TRON addresses in 2023, compared to a 12% increase in Bitcoin addresses.

Read the full report

Download the full report, The Illicit Crypto Economy, to unlock even more insights around each of these key findings and to dig even deeper into our 2023 data.

Want to learn more about how TRM Labs helps institutions like yours investigate and mitigate crypto-related frauds and crimes? Request a demo to learn more and see our blockchain intelligence platform in action.