The cryptocurrency industry’s mid-year report by Chainalysis offers a refreshingly positive outlook, with the grim shadow of criminality shrinking by 65% in the first half of 2023. However, amidst the optimism, a specter of menace persists – the rising ransomware attacks attributed to the resurgence of Big Game Hunting.

The opening act of 2023 offered a phoenix-like rise to the cryptocurrency industry, following a tumultuous 2023. Bitcoin and other digital assets soared by over 80% on the year. Even better, cryptocurrency-associated crime took a considerable nosedive, evident from the comparison of cumulative daily inflows to legitimate, risky, and illicit services between 2023 and previous years. However, this report excludes inflows to sanctioned entities or entities subjected to special measures by agencies like FinCEN.

Despite the overall drop in transaction volumes, the decline in illegitimate and risky inflows far outpaced that of legitimate services – 65% and 42% versus 28%, respectively. This indicates that the cryptocurrency market contraction disproportionately affected illicit activities more than the legitimate ones.

A major contributor to this fall in crime was the substantial reduction in scams, which have historically represented the highest revenue form of cryptocurrency-based crime. Cryptocurrency scam revenue fell by 77% in comparison to June 2022, a significant deviation from the norm, as increasing cryptocurrency prices usually correlate with higher scam revenue due to FOMO-induced susceptibility.

The dramatic fall in scam revenue can be traced back to the sudden disappearance of two large-scale scams: VidiLook and Chia Tai Tianqing Pharmaceutical Financial Management. Both of these scams followed the typical investment scam model but appear to have exit scammed, leaving a void in the overall scam revenue.

However, impersonation scams, wherein fraudsters impersonate authority figures to extort money, bucked the overall trend, declining by only 23% and seeing a 49% increase in individual transfers. This suggests a growing number of victims despite the lower total amount lost.

In stark contrast to the overall downward trend of cryptocurrency-related crimes, ransomware attacks are surging in 2023. The mid-year report indicates ransomware attackers could rake in approximately $898.6 million if the current pace continues, second only to 2021’s record $939.9 million. This resurgence is primarily due to Big Game Hunting’s comeback and an increase in successful small attacks.

Strains like Dharma and Phobos, typically deployed in ‘spray and pray’ attacks against smaller targets, and more sophisticated strains like BlackBasta and Cl0p, which target larger organizations, have been more active this year than in 2022. According to Andrew J. Davis from Kivu, these shifts align with the increasing number of extortionately high initial demands and extreme extortion techniques.

While the report does not overlook the likely impact of the Russia-Ukraine War on the decrease in ransomware incidents in 2022, it also underscores the critical need for businesses to maintain robust cybersecurity and data backup procedures given the significant threat that ransomware continues to pose.

This year began with a promising reduction in crypto-related crimes, demonstrating that law enforcement and crypto businesses’ combined efforts are bearing fruit. Despite the positive strides, the persistent rise in ransomware attacks underscores the importance of continuous vigilance and proactive protective measures.