Alisa Davidson April 25, 2025 Chainalysis has shared an early glimpse of their forthcoming State of Web3 report, which will be fully published in June. The report sheds light on critical issues such as theft, money laundering, and manipulations within the NFT market, emphasizing the need for safety and compliance in the Web3 space. A representative from Chainalysis highlighted the urgency of these findings, noting that the first quarter of 2022 marked a record high for cryptocurrency thefts in terms of value stolen.

While it may seem like the most thrilling read for data enthusiasts, the report portrays a broader picture beyond mere crime statistics. It notes that although criminal activities involving cryptocurrency remain a significant challenge—especially as transaction volumes rise, inflating the total value of illicit trades—such actions represent a diminishing portion of the overall cryptocurrency landscape over the past three years. by However, DeFi seems to be experiencing similar struggles that the broader cryptocurrency market faced in its earlier days, with illegal activities seeing a boost over the last couple of years. This highlights the inherent challenges in decentralizing systems. Notably, the report underscores that as of May 1, 2022, decentralized finance protocols were responsible for an eye-popping 97% of the $1.68 billion in cryptocurrency theft that year.

In 2022 alone, North Korean cybercriminals have reportedly achieved unprecedented heights in cryptocurrency theft, surpassing $840 million, primarily by targeting DeFi protocols. The highlights further assert that these North Korean hackers are also at the forefront of DeFi-related money laundering activities. This focus on these particular groups arises from their illicit gains, which allegedly support the nation’s weapons development programs. One can question the necessity of including such specifics in a facts-based report.

Chainalysis further highlights concerns surrounding the NFT market and the practice of wash trading. This occurs when a seller effectively trades an asset with themselves to inflate the perceived value or liquidity of that asset. The unregulated atmosphere of NFT trading marketplaces makes them particularly prone to such deceitful strategies. April 25, 2025 Illustration of wash trading techniques as outlined by Chainalysis.

Chainalysis emphasizes that this type of wash trading is far from harmless. For instance, NFT marketplaces may be duped into distributing rewards based on false trading activities. Additionally, genuine NFT collectors might be misled into believing that the marketplace possesses a greater volume of transactions than what actually exists, reflecting similarly on the NFT collections involved in such schemes.

The goal of conducting studies like this is to pinpoint and comprehend issues thoroughly, allowing for strategic reforms to enhance our reality moving forward. This effort aims to safeguard not only financial resources but also other assets, as the Metaverse grows and encompasses an increasing array of activities.

While NFT activity continues to surge, the number of downloads for NFT marketplace applications has sharply decreased by 90%.

The Wall Street Journal claims that “NFT sales are stagnating,” but what do the actual statistics reveal? Know More .

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• Vittoria Benzine writes about contemporary art from her base in Brooklyn, focusing on the human experience, counterculture, and chaos magic. Her work can be found in publications such as Maxim, Hyperallergic, and Brooklyn Magazine.