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Dark Web Markets: What's Next for Crypto Crime in 2023?

Though the general principles of financial crime remain largely the same, criminals and other bad actors continue to seek new ways raise, store, move, and spend digital assets. Having an idea of what may come next in the crypto industry is something of a holy grail – yet one that never fails to stop participants from making predictions about what to expect.  

As part of larger report in which our team of intelligence analysts threw their hats in the ring making bold predictions - some with high confidence and some with less so - here are our top five predictions for how criminal activity will develop in response to enforcement actions, legislation, and other forms of disruption in 2023.

More Darknet Marketplaces to appear 

There will be an increase in the number of Darknet Marketplaces, but these will deliberately be smaller operations whose goal is to remain under the radar, and over time adopt decentralized operating models. 

 Larger services can be more easily traced by law enforcement agencies, as well as come under attack by rival service providers. We predict there will be some weighing up though, as the more sites operated by a single group, the higher the chances of being exposed to hacks themselves. 

Without doubt, more Darknet Marketplaces will create greater challenges for law enforcement in shutting them down. One way to prepare for this development is to engage in better quality and increased efforts of proactive intelligence gathering against these targets, which may offset the risks posed by them.A Central Bank Digital Currency project is hacked. 

 With more Central Bank Digital Currencies (CBDCs) being launched, the chances of specific vulnerabilities emerging will be high. Albeit with somewhat low confidence; we say a theft affecting a CBDC, at the contract level may be executed. 

In 2022, there were many successful attacks against smart contracts resulting in almost $3 billion USD of losses.  A government-backed CBDC represents an extremely high-payoff target for a criminal, or even for a state-level group seeking to undermine the credibility of the financial system backing the CBDC. 

Asset recovery becomes more commonplace. 

With the overall rise in fraud, those who have lost funds, will seek to recover their losses.  New legislation and powers to seize assets will be announced, causing criminals to flee to jurisdictions where there is no legal authority or capability to seize crypto assets. 

Blockchain analytics tools will be more openly challenged. 

 With an increase in prosecutions of alleged criminals and Service Providers, blockchain analytics tools will be more openly challenged for the credibility and reliability of their data; in particular, cases involving de-mixing of transactions. 

 As blockchain analysis has become increasingly valuable to law enforcement and prosecution, there has yet to be a significant legal challenge to this form of evidence.   

Ren is forced to close doors. 

 Ren is forced to shut in 2023 leaving the market open for cross chain bridging, creating opportunities for a new service to emerge by certain illicit groups.   

Ren has been consistently abused by criminal groups - for example gaining favor with the North Korean linked ‘Lazarus’ group, and in doing so, suffering damage to its reputation. With plummeting liquidity, and notoriety for being used by criminals, Ren will not remain a viable option in 2023. 

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Nick Smart

Nick Smart

Blockchain Intelligence Associate Director

Crystal Blockchain

Member since

11 Apr 2023

Location

Dubai

Blog posts

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This post is from a series of posts in the group:

Blockchain in Banking and Financial Services

This group is to share any information related to enterprise wide Blockchain technology adaption in different Banking Financial Services sub-domains.


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