Crypto scam revenue plunged by 46% in 2022, says report

From a record of $10.9 billion in 2021, crypto scam revenue dropped to $5.9 billion

Last year was less profitable for crypto scammers as their revenue dipped approximately 50 per cent in 2022, as per a new study by blockchain analytics firm Chainalysis.

The blockchain firm noted that the decline in revenue could be linked to the drop in the value of crypto currencies due to the correlation between most scam types and the price of bitcoin.

Crypto scam revenue began 2022 on a rising trend but came swirling down in May at the beginning of the bear market after the collapse of the Terra ecosystem. It continued the downtrend until the end of the year.

From a record of $10.9bln in 2021, crypto scam revenue fell to $5.9bln. Due to the relationship between several heist types and the price movement of bitcoin, victims were hesitant to spend their funds as the asset continued to collapse.

Particularly, the majority of scams in 2022 were related to investment, and as a category, they generated the most revenue in the previous year in spite of the overall drop. On the other hand, romance scams stuck to a different revenue pattern and had no decline, in spite of having lower overall revenue as a category.

Romance scams, which involve building emotional bonds with victims and seek their help after a while, had the most harmful record of revenue per victim. With an average victim deposit of nearly $16,000, they exceeded the next category by three times.

The reason for the difference probably lies in the way the scams are put up to victims. Investment scams typically promise users oversized returns on investment, frequently based on an algorithmic, ‘can’t lose’ trading strategy. That pitch could be more likely to succeed when the prices of assets are increasing, and the news is full of stories of crypto investors striking it rich, Chainalysis said.

The blockchain analytics firm also found that most of the scams seemed to be controlled by the same individuals or groups.

The study defined patterns of scams receiving considerable amounts of funds from other illegal addresses, suggesting a link between the entities.

Strikingly, more than 200 fake websites contained identical information linked to some Commodity Futures Trading Commission (CFTC)-sanctioned entities.