Crypto Crime Drops 51% Despite 56% Transaction Volume Increase

TRM Labs, a leading blockchain intelligence firm, has released its annual report on cryptocurrency crime, revealing that only 0.4% of all digital asset transactions in 2024 were linked to illicit activities. This figure represents a significant 51% decrease from the previous year, despite a substantial 56% increase in the overall transaction volume within the crypto sector, which surpassed $10.6 trillion. The estimated illegal flows for the year amounted to around $45 billion, down from nearly $59 billion in 2023.

The report highlighted that the majority of crypto crime was dominated by sanction evaders, scammers, and funds associated with blocklisted addresses, which collectively accounted for over 85% of the illicit volume identified. Networks such as Tron, Ethereum, and Bitcoin remained the primary venues for such activities. Notably, Tron alone accounted for 58% of all criminal flows, although its illicit transaction volume decreased by half compared to 2023. This reduction was partly attributed to the effectiveness of the T3 Financial Crime Unit (T3 FCU), a public-private initiative aimed at combating USDT misuse on the Tron network. Since its inception, the T3 FCU has successfully frozen over $130 million and facilitated the return of nearly 20% of blocklisted USDT on Tron to victims or authorities.

The report also noted the impact of targeted sanctions against major exchanges in restricted jurisdictions, such as Garantex and Nobitex, which have significantly reduced inflows to these regions by 33%. Despite these positive developments, TRM Labs warned of emerging trends that require heightened vigilance. One such trend is the increasing use of cryptocurrency for terrorism financing, particularly by groups like ISIS-Khorasan (ISKP). Stablecoins remain the primary choice for such activities, although there is a growing interest in privacy coins like Monero (XMR).

Hacks also saw an uptick, with $2.2 billion stolen, marking a 17% increase from the previous year. The majority of these hacks targeted decentralized finance (DeFi) protocols, with North Korean actors being disproportionately responsible for nearly $800 million in thefts. These actors employ sophisticated methods, often focusing on private key theft, and have adapted their laundering tactics to utilize decentralized bridges and move funds rapidly across chains, making recovery exceptionally difficult for law enforcement.

Another concerning trend is the rapid adoption of artificial intelligence (AI) by fraudsters. According to TRM Labs, criminals are leveraging large language models (LLMs) to create highly personalized scam personas, generate convincing deepfake videos for extortion and investment scams, and produce sophisticated phishing messages. They are also using AI to create fake IDs to bypass Know Your Customer (KYC) procedures and generate non-consensual explicit imagery. TRM Labs anticipates a significant expansion of AI-powered crime in 2025, underscoring the need for enhanced security measures and regulatory frameworks to combat these evolving threats.