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An Anatomy of Crypto-Enabled Cybercrimes

Author

Listed:
  • Lin William Cong
  • Campbell R. Harvey
  • Daniel Rabetti
  • Zong-Yu Wu

Abstract

While the advent of cryptocurrencies and digital assets holds promise for improving and disrupting financial systems by offering cheap, quick, and secure transfer of value, it also opens up new payment channels for cybercrimes. A prerequisite to solving a problem is understanding the nature of the problem. Assembling a diverse set of public, proprietary, and hand-collected data, including dark web conversations in Russian, we conduct the first detailed anatomy of crypto-enabled cybercrimes and highlight relevant economic issues. Our analyses reveal that a few organized ransomware gangs dominate the space and have evolved into sophisticated corporate-like operations with physical offices, franchising, and affiliation programs. Their techniques have also become more aggressive over time, entailing multiple layers of extortion and reputation management. Blanket restrictions on cryptocurrency usage may prove ineffective in tackling crypto-enabled cybercrime and hinder innovations. Instead, blockchain transparency and digital footprints enable effective forensics for tracking, monitoring, and shutting down dominant cybercriminal organizations.

Suggested Citation

  • Lin William Cong & Campbell R. Harvey & Daniel Rabetti & Zong-Yu Wu, 2023. "An Anatomy of Crypto-Enabled Cybercrimes," NBER Working Papers 30834, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30834
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    References listed on IDEAS

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    1. Sokolov, Konstantin, 2021. "Ransomware activity and blockchain congestion," Journal of Financial Economics, Elsevier, vol. 141(2), pages 771-782.
    2. Dan Amiram & Bjørn N. Jørgensen & Daniel Rabetti, 2022. "Coins for Bombs: The Predictive Ability of On‐Chain Transfers for Terrorist Attacks," Journal of Accounting Research, Wiley Blackwell, vol. 60(2), pages 427-466, May.
    3. Sean Foley & Jonathan R Karlsen & Tālis J Putniņš, 2019. "Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed through Cryptocurrencies?," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1798-1853.
    4. Igor Makarov & Antoinette Schoar, 2021. "Blockchain Analysis of the Bitcoin Market," NBER Working Papers 29396, National Bureau of Economic Research, Inc.
    5. Makarov, Igor & Schoar, Antoinette, 2021. "Blockchain analysis of the Bitcoin market," LSE Research Online Documents on Economics 118897, London School of Economics and Political Science, LSE Library.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Zhang, Luyao, 2023. "Machine Learning for Blockchain: Literature Review and Open Research Questions," OSF Preprints g2q5t, Center for Open Science.

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    More about this item

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • K24 - Law and Economics - - Regulation and Business Law - - - Cyber Law
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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