Crypto scams are falling as victim investors exit

Chainalysis crypto scam report

According to a Chainalysis report released on Tuesday 16 August 2022, the research suggests that total crypto scam revenue is presently resting at $1.6 billion, a 65% decrease from the prior year period, which appears correlated to the market average of falling cryptocurrency prices.

The report points out that speculative investment opportunities and outsized profits appeal most to victims during bull markets and that traders more likely to fall for crypto scams. Bull markets also have a larger percentage of new, novice crypto investors who are more vulnerable to investment scams.

The numbers in the report are admittedly biased in the report because of the comparably massive PlusToken and Finiko cases in 2021, which generated $3.5 billion in total scam income. According to reports, the most significant fraud case of 2022 has only garnered $273 million to the cannabis investing portal JuicyFields.io, which has locked investors out of their accounts on its cannabis-focused "e-growing" service.

On the other hand, crypto-based hacking has defied the trend, jumping 58.3% to $1.9 billion through July 2022, excluding the $190 million Nomad bridge attack that began on August 1st. This value increase is primarily due to the emergence of decentralised apps, which surged in 2021. Often scammers create fake giveaway scams or replicate existing sites to promote "free money" or guaranteed returns. These scams function by stealing personal information, private keys and other personal details which they transfer to an anonymous digital wallet.

According to the research, a significant concentration of these hackers originated from North Korean elite cyber organisations such as Lazarus Group, with these entities accounting for over half of the crypto seized.

Crypto scams are not entirely a bad thing

Due to smart contract programming languages like Solidity are relatively new, the fraud cases are not terrible as these vulnerabilities can improve security by allowing code audits. The crypto brand has suffered due to bad actors leaving investors feel that there is no security, but through learning the hard way from these mistakes we hope that industry participants will build the crypto ecosystem back better.

The report also stated that darknet market income is down 43% in 2022; dark web black markets provide illegal products and services, typically utilising cryptocurrency as payment.