Cryptocurrency ransom payments drop amid record-high illicit transactions in 2022: reports
- Ransomware attackers extorted at least US$456.8 million in cryptocurrency from victims last year, a 40 per cent decline from 2021, Chainalysis said
- Illicit cryptocurrency transactions reached US$20.1 billion in 2022, up from US$18 billion in 2021, according to a separate report from the firm
Ransomware payments in cryptocurrency saw a sharp drop in 2022 despite a record-high volume of illicit transactions, according to research firm Chainalysis, as the virtual asset sector continues to reel from a tumultuous year that saw several companies collapse.
Ransomware attackers extorted at least US$456.8 million in cryptocurrency from victims last year, a 40 per cent decline from US$765.6 million in 2021, Chainalysis said in a report published on Thursday.
The decline, though, does not suggest a drop in the number of attacks. Rather, it is because victim organisations are becoming less willing to pay attackers, the report said.
In 2022, 59 per cent of ransomware victims did not pay a ransom, up from only 24 per cent in 2019, according to Chainalysis, citing data from cybersecurity firm Coveware.
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Reasons for the drop in ransom payments include disruptions such as the Russia-Ukraine war and Western law enforcement’s increased pressure on ransomware gangs, which led to fewer successful extortion attempts, Chainalysis said, citing Michael Phillips, chief claims officer of cyber insurance firm Resilience.
Paying ransoms has also become legally riskier, after the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued an advisory in September 2021 that warned against ransomware payments to sanctioned entities.
Demands by cyber insurance firms for organisations to implement better cybersecurity measures also contributed to a decrease in extortion payments, according to Chainalysis.
Fewer ransom payments in cryptocurrency, however, came amid record-high illicit use of the virtual assets.
Illicit cryptocurrency transactions reached US$20.1 billion in 2022, up from US$18 billion in 2021, according to a separate report by Chainalysis published last week.
But the research firm noted that the figure represents a lower bound estimate, and that 44 per cent of last year’s illicit transaction volume came from activities associated with entities sanctioned by the US.
Cryptocurrency-related scams have also been on the rise in Hong Kong, as the city sees an increasing number of cybercrimes.
In the first half of 2022, Hong Kong saw 798 cryptocurrency-related scams, a 105 per cent increase from the same period in 2021. The amount involved was HK$387.9 million, representing a 130 per cent year on year increase.
Overall cyber-related offences from January to June last year totalled 10,613, involving about HK$1.58 billion (US$201 million), marking a 46 per cent increase from the 7,270 cases Hong Kong recorded in the same period in 2021.
In one case, a 30-year-old woman who runs a currency exchange business that also provides cash-to-cryptocurrency exchange services, was cheated out of HK$2.2 million after receiving an anonymous WhatsApp message from someone who claimed to be in charge of an online cryptocurrency trading platform and was looking to collaborate.
