One of the more interesting aspects of the crypto world is how the value of digital assets can rise and fall so dramatically. In light of the thefts and hacks and scams that permeate the $2.1 trillion market, this fluctuating underlying value can have some profound effects.

One example was the DAO hack in 2016, where the value of stolen Ether kept changing as efforts to reclaim the theft were underway; and even more so, after the hard fork created Ether Classic, the value of what the thief got away with was at times worth $10 million. Other times, a few years later, it would’ve been worth an astounding $1.5 billion, assuming the thief hadn’t sold the Ether Classic.

A more recent example of this is seen in the rise of Bitcoin in the past year. Blockchain forensics firm Chainalysis reported today that cryptocurrencies stolen through July have risen 84 percent to just over $1.5 billion compared to the same period last year. But check this out, the number of thefts has only risen 2.8 percent, while the average amount stolen per event has risen 78 percent.

“Much of the change in the value compromised is attributable to rising asset prices,” Chainalysis said in its Mid-Year Crime Report. “For example, the price of Bitcoin has increased from an average price of $26,141 in the first seven months of 2023 to an average price of $60,091 this year through July, an increase of 130 percent.”

Courtesy of Chainlaysis

So, it may not seem obvious, but these huge price swings influence hackers and thieves. Or think about it this way, a bank robber who gets away with $10 million can’t sit around and hope that he now has $100 million because the dollar has skyrocketed. Conversely, with inflation, that $10 million is going to lose value over time.

“Crypto thieves seem to be returning to their roots and targeting centralized exchanges again after four years focused on their decentralized counterparts, which typically do not trade Bitcoin,” Chainalysis said.  

Overall, illegal activity in crypto fell to $16.7 billion year to date compared with $20.9 billion in the same period last year, a 19.6 percent decline, Chainalysis said. “Legitimate activity is growing faster than illicit activity on-chain,” the firm said. The blockchain sleuths said, as they always do, that the lower number will likely rise as new illicit activity is detected.

Another area that has seen a rise in activity this year so far is ransomware payments. While 2023 was a record year for ransomware -- where scammers hack into the computer systems of hospitals, energy firms or vital infrastructure and won’t relent until they’re paid in crypto – this year is on pace to set a new record, according to Chainalysis.

“At this point last year, we reported cumulative ransomware payments of around $449.1 million through the end of June 2023,” the firm said. “This year through the same period, we’ve recorded a total of $459.8 million in ransoms paid, setting 2024 firmly on track for the worst year on record.”

A troubling trend is that high-profile ransomware victims, who typically pay the most, are shelling out record amounts.  Chainalysis describes these as “very high severity strains,” which extorted more than $1 million per year. At the beginning of 2023, this category had a median payment amount of $198, 939, yet by mid-June of this year it had risen to $1.5 million, according to Chainalysis.

Courtesy of Chainalysis

“This pattern could suggest that these strains are starting to target larger businesses and critical infrastructure providers that may be more likely to pay ransoms of inordinate size due to these targets’ deep pockets and systemic importance,” Chainalysis said.