Scams involving cryptocurrencies are growing in 2024, with inflows of many billions of dollars, and they represent one of the biggest sectors of illegal activity related to cryptocurrencies year to date (YTD). This is supported by a recent study from blockchain analytics company Chainalysis, which also discovered that wallets that have only been operational this year had received 43% of all YTD fraud inflows.
Given that merely 29.9% of all YTD flows went to wallets that were active in 2022—the next highest year—this indicates a considerable uptick in new schemes.
This year has also seen a noticeable drop in the typical scammer’s lifespan. The average number of days scams were active between 2020 and 2024 YTD dropped dramatically, from 271 days for scams that started in 2020 to 42 days so far for scams that started in 2024.
Eric Jardine, Cybercrime Research Lead at Chainalysis, stated, “Taken together, these two findings clearly indicate scammers have shifted away from complex Ponzi schemes that cast a wide net to more specific schemes like romance scams or address poisonings.”
Researchers from Chainalysis predicted earlier this year in its 2024 Crypto Crime Report that, of all scam categories, romance scams, also known as pig-executing scams, have had the worst effect on victims based on typical payment size.
Furthermore, according to the company’s data, there has been an 85x increase in this kind of scam activity since 2020. Only one of these businesses, a well-known fraud shop, got US$10.5 million from con artists that specialize in romantic scams between 2022 and 2024.
Scammers could have acquired anywhere from 525K to 2.1 million social media accounts, which they could then use to target victims, with one business offering “seasoned” social media profiles for anything from US$5 to US$20 per account.
The shift away from Ponzi schemes suggests that victims are now being targeted through more intimate means, such as text messaging or social networking. On the one hand, this kind of tactical change makes it more difficult to find fraudsters and more difficult to make compensation to victims, yet there are unmistakable examples of asset freezes and law enforcement involvement that demonstrate how victims can still be made whole. This also serves as a reminder that anyone can become a target, even while it’s simple to brush off targeted scams—especially romance scams—as “something that won’t happen to me.”
Therefore, regardless of how harmless their messages may seem, it is crucial to remain vigilant and be especially cautious of contacts from people you weren’t expecting to hear from. Talking to someone doesn’t always indicate that you are being scammed, but you should be wary of requests to send money,” Jardine continued.
Also, as Chainalysis has shown, blockchain visibility has turned out to be an extremely effective tool for decoding and exposing cybercriminals’ methods of operation.
Together with our partners, we keep a careful eye on the crypto crime ecosystem in order to expose any unlawful activities. In order to disrupt and stop these scams, we will keep collaborating with authorities and cryptocurrency exchanges that have the knowledge and resources to do so, said Jardine.
Also read: DORA (Digital Operational Resilience Act) Batch 2 Changes and Expectations from BFSI sector
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