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Crypto Crime Was Down in 2023 – Here’s How Binance’s Efforts Contributed to This Trend


Main Takeaways

  • In 2023, there was a marked drop in crypto crime, with less value being received by illicit crypto addresses and a shrinking share of illicit transactions. This was driven by increased industry-wide security and compliance efforts and better collaboration with law enforcement partners.

  • Binance’s efforts were instrumental in reducing crypto-related crime on the scale of the entire ecosystem, demonstrating its commitment to setting industry standards in tackling cybercrime. Binance invested heavily in enhancing its compliance program and expanded its collaboration with law enforcement in 2023, demonstrating significant progress and growth in various areas of compliance work.

The recently unveiled 2024 Crypto Crime Report by blockchain data firm Chainalysis summarizes 2023 trends and improves the accuracy of previous estimates in light of the updated data. The findings suggest a significant reduction in some of the key crypto crime metrics from 2022 to 2023: the total value received by illicit crypto addresses and the share of illicit transactions in the overall flow of crypto transaction activity both went down markedly.

What drove these positive dynamics? Clearly, it wasn’t criminals trying less hard to steal or abuse digital assets for their nefarious purposes last year. First and foremost, the decline in illicit volumes and transaction share is the result of the crypto industry as a whole stepping up its collaborative security efforts, perfecting its defenses, and tightening its collaboration with law enforcement agencies. It is also likely that the average crypto user, too, has become more vigilant and aware of dangers like scams and fraud.

As the largest digital-asset ecosystem and leader in the space, Binance has undoubtedly contributed its fair share to curbing crypto-related crime. From constantly enhancing our security systems and transaction monitoring capabilities to providing critical intelligence and training to global law enforcement partners, we invested tremendous effort and resources in countering criminal activity last year – and continue doing so every day. Given the scale of our operations, the results of this work are definitely reflected in the aggregate numbers.

(Crime) Number Go Down

Over the last few years, Chainalysis’ annual Crypto Crime Report has become a widely regarded benchmark for assessing the scale of illicit activity in the crypto space. Like with any tool that measures a complex and multi-dimensional phenomenon, the methodology and data it uses are not flawless, yet many experts in the digital-asset and cybersecurity industries have come to view it as one of the most robust and comprehensive available assessments of the state of crypto-related crime and security in the field.

According to Chainalysis’ report, in 2023, arguably the most illustrative of crypto-related crime metrics – the share of illicit transactions in the overall crypto transaction volume – went down from 0.42% to 0.34%. These include assets stolen in crypto hacks as well as funds sent to wallets that Chainalysis analysts designated as illicit – those associated with ransomware groups, fraud shops, darknet markets, and online drug sellers; addresses linked to terrorism financing and sanctioned entities and jurisdictions, and other relevant categories.

As you can see, Chainalysis casts a very wide net, and their database of illicit wallets is among the most comprehensive in the industry. In light of this, their estimate that only a fraction of percent of all crypto transactions were linked to criminal activity or sanctioned entities demonstrates that in 2023 the digital-asset space has been an extremely unwelcoming place to bad actors, and even more so than in 2022. This stands in stark contrast with false beliefs about crypto being a place of rampant lawlessness that some people still hold and promote.

Another key metric describing the scale of crypto-related crime over a given period, the total value of digital assets received by illicit addresses, also showed a considerable decline between 2022 and 2023, going from $39.6 billion to $24.2 billion. To put this into perspective, the overall amount of illicit funds that flowed through the global financial system last year was $3.1 trillion, according to the estimates in NASDAQ’s recent Global Financial Crime Report.

Binance: All In on Collaborative Security

Laser-focused on the security of our users and their assets, in recent years we have committed tremendous resources to building a robust and comprehensive compliance program. We believe that Binance’s status as a responsible leader in the digital-asset space means that we must set industry standards in security and compliance, thus helping the entire ecosystem preserve its integrity and fortify its defenses against bad actors.

The fact that, in 2023, crypto-related crime trended down while key metrics characterizing the progress of Binance’s compliance and security efforts went up, is hardly a coincidence. Of course, no one player in the space can claim credit for the entire industry’s progress, but we believe that our collaborative and individual efforts were instrumental in creating, fueling, and maintaining the momentum that led to material progress in curbing crypto-related criminal activity.

Approaching ecosystem security as a responsibility shared between industry players, users, regulators, and law enforcement, in 2023 we stepped up collaborative efforts to combat crime. In the past year, our specialized teams responded to over 58,000 law enforcement requests, and conducted 120 workshops and training sessions with crime fighters globally (up from 70 in 2022), providing essential intelligence, know-how, and skills that underpinned the success of major investigations and enforcement actions. As the chart demonstrates, in 2023 we expanded the scale of these efforts compared to the previous year.

Some great 2023 examples include our collaboration with the National Bank of Tajikistan and blockchain analytics firm TRM Labs that led to the arrest of several key members of the terrorist group Islamic State – Khorasan Province (ISKP) and assisting the Royal Thai Police in dismantling international criminal networks responsible for multi-million-dollar scams targeting thousands of victims.

Quantitative and Qualitative Improvement

One catch-all figure describing the growing scale of our compliance work last year is the overall amount of funds Binance committed to its compliance program. Between 2022 and 2023, this number went up from $158 million to $213 million, marking a 35% increase. But what exactly do these dynamics mean for Binance’s actual capacity to combat cybercrime?

The short answer is that, when it comes to security and compliance, we invest in world-class talent, building or acquiring industry-leading technology, and putting in place efficient policies and processes. Here are several lines of compliance work where the progress was particularly remarkable last year.

The first step in fighting crime in the digital-asset space is detecting suspicious activity, and for that end, we are constantly monitoring transaction flows on and off our platform using a combination of automated and manual approaches. 

In 2023, we significantly improved our transaction monitoring capabilities. Our on-chain monitoring team processed 677,772 on-chain alerts. Thanks to the implementation of a new automation tool, we achieved a 150% increase in the productivity of on-chain transaction monitoring, meaning more potential threats analyzed and addressed for the same amount of resources allocated.

Binance does not solely conduct analysis of blockchain exposure; our enhanced purpose-built tools also internally monitor for unusual transactions and activities. In 2023, our analysts reviewed and closed 2,648,318 off-chain alerts. As a result of implementing new tools, both in-house and external, we increased the productivity of these efforts by an estimated 40% compared to last year.

An internal investigation is a basic unit of analysis when investigating transactions that for any reason give rise to a suspicion that illicit activity may be taking place. In 2023, our team recorded an increase of 157% in total internal investigations conducted, and improved productivity by 180%.

Finally, on the market surveillance front, our team tasked with monitoring trading activity on Binance and ensuring the integrity of our markets, introduced a new third-party monitoring solution and reached the rate of investigating an average of 20,000 alerts per month.

All these improvements mean that Binance’s ability to detect and tackle illicit activity that takes place within our ecosystem – or even touches it tangentially like when criminals attempt to move ill-gotten funds through it – has grown stronger, making it even more difficult for bad guys to achieve their goals.

Looking Ahead

With 2024 set to mark a fundamental turn of the crypto industry toward even more stringent and mature compliance practices and habits, we remain steadfast in our commitment to offering a safer crypto environment for all our users. We will further ramp up our efforts to combat illegal activity and continue to invest in refining our compliance and monitoring initiatives, employing cutting-edge technology and best-in-class talent. This year already saw us strengthening our compliance leadership team as Steve Christie, a world-class expert and our former Senior Vice President of Compliance, returned to Binance as Deputy Chief Compliance Officer.

If the digital-asset industry at large continues to maintain this benign momentum by constantly enhancing its security and compliance capabilities while solidifying the ties of cooperation within the space and with law enforcement, bad actors will have even less of a chance when trying to exploit the Web3 ecosystem. In light of these dynamics, eventually, it will become abundantly clear even to the most rigid of skeptics that crypto is a very bad place for criminals.

Further Reading