According to reports from Chainalysis, attackers are posting malware instructions to blockchains 440% more often since unrestricted Chinese open-source AI models arrived. Daily malicious on-chain writes climbed from 2.06 to 11.1 in under a year, with instances of malware instructions written into on-chain transactions and smart contracts averaging 11 cases per day as of the latest data. The firm calls this technique 'blockchain dead drops' (BDDs), where hackers store malicious code on public blockchains instead of centralized servers that can be seized or blocked. As reported by Chainalysis, such cases averaged two per day prior to the release in the middle of last year of powerful Chinese open-source AI models with no restrictions on generating malicious code.
As reported by Chainalysis, the recent explosion in blockchain malware activity is directly linked to mid-2025, when powerful open-weight Chinese models launched with no guardrails against writing malicious code. This erased the skill barrier that once kept dead drops rare, according to the firm's analysis. The technique dates to 2013 when a Necurs botnet variant stored domains on a Bitcoin fork called Namecoin, and reached Ethereum Virtual Machine chains in 2023 as EtherHiding. However, powerful new open-source AI models are now allowing hackers to carry out attacks on a larger scale, while growing involvement by state actors is making them more sophisticated. According to Chainalysis, open-source AI models can be run independently, giving malicious developers greater control over the model and more privacy because they do not have to submit their source code to large cloud providers that may monitor their platforms for abuse.
According to Chainalysis findings, state-linked operators from North Korea and Iran now generate most of the activity. Cybercriminals accounted for nearly all dead drop activity through early 2024, but by Q2 2026, state-linked groups produced roughly two-thirds of new activity each quarter and half the total. North Korea's UNC5342 now runs a three-chain relay on TRON, Aptos, and BNB Smart Chain, with the attacker rotating infrastructure by publishing new transactions that infected devices automatically pick up. Blockchains can appeal to state-linked groups in countries where renting servers or paying for hosting can trigger security checks or run into payment obstacles, according to Chainalysis.
As reported by Chainalysis, the permanence of blockchains gives threat actors' cyber campaigns longevity, allowing them to communicate with compromised machines without fear of losing their command-and-control relayer. The technique allows campaigns to survive domain seizures, hosting takedowns, and repository removals. Suspected Iranian intelligence operators send tiny Bitcoin payments to a well-known address linked to Satoshi Nakamoto, with the malware searching for data inside each transaction to retrieve current attacker infrastructure. According to Vitaly Kamluk, founder of cybersecurity consultancy TitanHex, when malware uses a blockchain to relay key information, its attempts to reconnect with the attacker become much harder to block effectively. Blockchains are typically not involved in the initial infection of a machine, which often happens through conventional means such as supply-chain attacks or malicious downloads, as noted by Eric Jardine, head of research at Chainalysis.
According to Netskope researchers cited in the report, the ChainDrop supply chain attack hit more than 440 npm packages in August 2026, demonstrating how the technique has spread well beyond cryptocurrency. The report notes that defenders cannot simply block blockchain traffic without breaking every legitimate wallet and app, as the same permanence that shelters attackers leaves every update on a public ledger. In crypto specifically, the number of hacks rose roughly 150% to 207 in the first half of the year, according to blockchain intelligence firm TRM Labs. The transparency of blockchains cuts both ways, with every update attackers post being permanently recorded, letting investigators map their infrastructure and connect campaigns that would otherwise look unrelated, according to Chainalysis.
