Record-Breaking $20.1 Billion in Illegal Crypto Transactions: Chainanalysis Report

Hello,

In today’s dispatch we have:

• Record-Breaking $20.1b in Illegal Crypto Transactions

• Thailand's Virtual Banks Set to Take the Country by Storm by 2025

• Google Ads Malware Drains NFT God’s Entire Crypto Wallet

An important Chainanalysis report landed last week!

So, last year crypto-criminals hit the jackpot with a record-breaking $20.1 billion in illegal transactions, mostly involving companies targeted by US sanctions. And this is just the tip of the iceberg - it does not include non-crypto crime proceeds. ( like drug trafficking with crypto payment).

But as it turns out, the 2022 crime report wasn't all bad news. Let's break it down:

• Yes, the illicit transaction value hit a record high of $20.1bn.

  But, only 0.24% of crypto transactions involved illicit activity.

• Yes, the proceeds reached $18 billion compared to the $14 billion recorded in 2021. 

  But, YoY transaction volumes associated with terrorism financing, darknet markets, and scams decreased.

• Yes, Stolen funds increased 7% compared with 2021.

  But, the share of all cryptocurrency activity associated with illicit activity has only risen for the first time since 2019.

More from the report:

• 44% of illicit transactions were related to sanctioned platforms.

• OFAC sanctioned Russia-tied crypto exchange Garantex for facilitating more than $100 million in illicit transactions.

• Chainalysis's count of illicit transactions is a conservative estimate- The count does not include non-crypto native crimes or money tied to the bankruptcy cases of Celsius, Three Arrows Capital and FTX.

Now let's dive into the 44% of illegal transactions connected to sanctioned platforms:

OFAC and other agencies put sanctions on bad guys who threaten national security and foreign policy. And these bad actors are using crypto to hide, but it's getting harder as crypto is becoming more transparent and easier to track.

• OFAC made big crypto designations in 2022, including Hydra, Tornado Cash, and Garantex. 

• Hydra had the most criminal activity, with 68.2% from illegal sources. 

• Garantex had 6.1% from illegal sources, higher than the average. 

• Tornado Cash received 34% from illegal sources with fluctuations. 

• Activities include cybercrime, drug trafficking, money laundering, and involvement in Russia's invasion of Ukraine.

Chainanalysis mentioned that the dollar amount of illicit transactions might keep growing as more information pops up. To keep things extra safe, they suggested that crypto companies should link their off-chain and on-chain data like peas in a pod.

Thailand's Virtual Banks Set to Take the Country by Storm by 2025

The Bank of Thailand is planning to let virtual banks set up shop in the country by 2025. The move focuses on increasing competition, expanding loan access, and lowering costs for businesses and individuals.

The central bank will begin accepting applications for virtual bank licenses in 2023. - says the "Consultation Paper on Virtual Bank Licensing Framework."

This move aims to make it easier for new banks to enter the market in Thailand, thereby increasing competition.

They will issue three different types of licenses to banks that want to operate virtually, but they'll have to meet some requirements first - will be rolled out in 2024. The virtual banks will have to play by the same rules as regular banks.

The Central Bank did not forget to mention that virtual banks play nice and avoid any shady lending practices, providing preferential treatment to related parties, or abusing their dominant market position, as these actions can jeopardize depositors' and consumers' financial stability.

Google Ads Malware Drains NFT God’s Entire Crypto Wallet

NFT God, aka Alex, an NFT influencer, lost all of his digital assets and NFTs in a hack on January 14th. He lost the NFTs after accidentally downloading malicious software from a Google Ads search result.

Alex was searching Google for an open-source video streaming software called OBS. Instead of clicking on the original website's link, he clicked on a sponsored advertisement, thinking it would be the same thing. Unfortunately, this proved to be a costly mistake.

The sponsored link led to malware being downloaded alongside the software, which allowed the attackers to gain access to Alex's crypto wallet. The hackers then transferred 19 Ether, a Mutant Ape Yacht Club (MAYC) NFT with a current floor price of 16 ETH ($25,000), and a number of other NFTs from Alex's wallet.

The majority of the ETH was transferred through multiple wallets before being sent to the decentralized exchange (DEX) FixedFloat, where it was exchanged for unknown cryptocurrencies.

Alex realized something was off when a couple of strange tweets appeared on his Twitter accounts. He discovered that the malware had also compromised his Substack account the next day and sent phishing emails to his 16,000 subscribers.

Looking back, Alex believes the "critical mistake" that allowed the wallet hack was setting up his hardware wallet as a hot wallet by entering its seed phrase "in a way that no longer kept it "cold" or offline. This allowed the hackers to gain control of his crypto and NFTs.