Nine months ago, Bitcoin reached $69,000 after a wild ride. Since then, its price has been divided by three and the whole market seems to have entered a bear market. In practice, this does not only affect investors. Hackers and other scammers also seem to be affected by the bear.
Illicit markets face cryptocurrency prices
On August 16, the company Chainalysis, which specializes in on-chain analysis, published a report on illicit activities related to cryptocurrencies in 2022.
Thus, this one wanted to study the link between the price of cryptocurrencies and illicit activities.
So far, 2022 ranks behind 2021 and 2019 in terms of value received by entities identified as illicit.
However, as Chainalysis points out, not all illicit activity is created equal. Thus, where some have seen their volumes decline in line with the market, others have followed the opposite trend.
Scammers, collateral victims of the bear market?
Scams are widespread in the cryptocurrency sphere. However, they seem to have a harder time convincing their victims in the context of a bear market.
For example, $1.65 billion has been lost to scams since the beginning of 2022. This represents a 65% decrease compared to 2021, in the middle of a bull run.
Furthermore, Chainalysis researchers found a correlation between the price of Bitcoin and the amount of money stolen in scams.
These numbers suggest that fewer people are falling for these scams. One explanation could be that the drop in the price of cryptocurrencies has brought down the general euphoria. As a result, there are fewer newcomers to the ecosystem, who are usually prime targets for scammers.
In addition to this reduction in the number of victims, the top scams have seen a significant reduction in the amount of money stolen. For example, where 2021’s top scam, Finiko, stole $1.1 billion, 2022’s titleholder JuicyFields stole 5 times less. Therefore, in addition to the frequency, it is also the amounts stolen that have decreased.
Darknet: the marketplace shunned during the bear market
Like the scams, the Darknet marketplaces have also seen a drastic drop in traffic.
According to Chainalysis, the Darknet has seen a 43% drop in volume, from $1.5 billion in 2021 to less than $1 billion in 2022.
“Unlike the scams, this has not been the case for the entire year. Darknet market revenues for 2022 exceeded 2021 revenues until April, when the rate of increase collapsed.”
According to Chainalysis, this is likely due to the closure of the Hydra platform in early April. Indeed, on April 5, this predominant Darknet marketplace was closed.
Hackers: the big winners of the bear market
Let’s move on to one of the biggest scourges of decentralized finance: hackers. Bull or bear, they don’t care about the state of the market.
Thus, the latter are accounting for twice as many larcenies as in 2021. In fact, nearly 2 billion dollars have been stolen so far in 2022, compared to less than 1 billion at the same time in 2021.
“Much of this can be attributed to the staggering increase in funds stolen from DeFi protocols, a trend that began in 2021. As we’ve said before, DeFi protocols are particularly vulnerable to hacking, as their open source code can be studied ad nauseam by cybercriminals looking for exploits, and it’s possible that the protocols’ incentives to grow rapidly will lead to breaches of security best practices.”
Crime down, but no victory yet
Taken together, it would appear that the bear market is leading to a reduction in illicit activity. On average, they have decreased by 15% compared to 2021.
This decrease is mainly due to the decrease in the number of scams and potential victims.
However, the resurgence of DeFi hacks should not leave one indifferent. This scourge that has been plaguing DeFi for several years must be stopped.
Recently, the Acala protocol suffered from a flaw in the creation of its aUSD stablecoin. Thus, an attacker managed to create millions of tokens out of nowhere, plunging the price into the abyss.
