New Report Reveals Over Half Of Illegal Crypto Transactions Are Linked To Terrorist Groups And Sanctioned Entities

So far, concerns have escalated over the use of cryptocurrency by sanctioned groups and terrorist organizations, as revealed in the latest “2024 Crypto Crime Report” by leading blockchain analytics firm Chainalysis.

The report unveiled that over $24.2 billion of unlawful crypto transactions occurred in 2023, with a significant portion linked to entities subject to “sanctions or involved in terrorist activities.”

The Role Of Sanctioned Entities And Terrorist Organizations

According to the report, despite a decrease in overall illicit transaction volume compared to previous years, there has been a substantial increase in the proportion of funds attributed to sanctioned or terrorist-linked recipients.

Approximately 61.5% of total illicit transaction volume in 2023 was associated with these entities, underscoring the concerning trend.

The report disclosed that sanctioned entities, including North Korean hacking groups and US-designated terrorist organizations like Hezbollah, continue to leverage digital currency for fundraising purposes. Andrew Fierman, head of sanctions strategy at Chainalysis added:

Actors subject to sanctions are often cut off from international traditional financial systems, and crypto can become an attempted alternative mechanism to store, send, and receive funds.

Organizations like the crypto “mixer” Tornado Cash and Garantex emerged as significant recipients of illicit funds throughout 2023, despite facing sanctions from regulatory bodies.

Meanwhile, according to the report, sanctions have demonstrated efficacy in curtailing the flow of digital currency funds, with notable reductions observed following their imposition.

Concerning the challenges posed by illicit digital currency activity, the report disclosed that efforts to trace and seize these funds have become increasingly “sophisticated.”

Fierman noted:

The transparent nature of cryptocurrency combined with blockchain analytics provides an invaluable forensic tool that empowers governments to identify, trace, and disrupt the flow of funds – something that isn’t possible with other forms of value transfer, especially cash.

Regardless, terrorist organizations persist in their attempts to exploit digital currency for fundraising, deploying intricate networks of exchanges and service providers to obscure their activities.

A Recap Of 2023’s Crypto Security Challenges

According to a recent report from De.FI, a Web3 security firm overseeing the REKT database, 2023 proved to be a pivotal year in the cryptocurrency realm, with hackers orchestrating heists totaling approximately $2 billion.

This sum of losses, accrued across various incidents, underscores persistent vulnerabilities within the decentralized finance (DeFi) landscape. Supporting this assessment, TRM Labs reported that by mid-December 2023, digital currency thefts had amounted to $1.7 billion, marking a decrease from the previous year.

Noteworthy breaches targeted platforms such as Atomic Wallet, BonqDAO, Multichain, and Poloniex, exacerbating the challenges confronting the industry.

Beyond these individual incidents, Chainalysis also underscored the broader susceptibility of the cryptocurrency sector to cyberattacks, shedding light on the “overarching” security concerns within the industry.

Meanwhile, apart from cyberattacks, digital currency have also been implicated in other illicit activities such as the sale of illegal products. In a separate incident, the office of the US Attorney, led by Philip R. Sellinger, pursued a “civil forfeiture action” aimed at reclaiming $54 million in cryptocurrency.

This substantial amount is directly associated with an illicit narcotics distribution network operating on the darknet, primarily based in New Jersey.

Featured image from Unsplash, Chart from TradingView