An Anatomy of Crypto-Enabled Cybercrimes
Abstract
The advent of cryptocurrencies and digital assets holds the promise of improving financial systems by offering cheap, quick, and secure transfer of value. However, it also opens up new payment channels for cybercrimes. Assembling a diverse set of public on- and off-chain, proprietary, and hand-collected data, including attacker–victim negotiations and dark web conversations in Russian, we present an initial anatomy of crypto-enabled cybercrimes, highlighting relevant economic issues and proposing areas for future research. Among others, we find ransomware, as the most dominant organized crypto-enabled cybercrime, entails criminal gangs that operate like firms who adopt modern revenue models and carefully manage their reputations. We suggest that blanket restrictions on cryptocurrency usage may prove counterproductive. Instead, blockchain transparency enables effective forensics for tracking, monitoring, and shutting down dominant cybercriminal organizations, which potentially facilitates a more secure and reliable crypto ecosystem in the longer term.
This paper was accepted by David Simchi-Levi, finance.
Funding: This work was supported by the National University of Singapore (NUS), Ripple’s University Blockchain Research Initiative (UBRI), the Israel Science Foundation (ISF), and the Cornell FinTech Initiative.
Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.03691.
