Like every nascent technology, especially related to financial markets, cryptocurrencies provide a wide space and multiple opportunities for criminals, scammers, rug pullers and other bad actors who wish to make profits, opposing the law. Crypto space keeps providing new challenges for all of its participants and cyber police, since there are often big profits to be reaped here, especially during bull markets.
Classic scheme scammers use and AI upgrades on them
Certain blockchain analytics companies track scammers and fraudsters’ activities overall, sharing with the public data on their profits, transactions by which they transfer stolen funds. According to such data providers, bad players’ revenues were pretty high in 2022, comprising almost $40 billion. In 2023, this figure dwindled, impressively dropping to $24.2 billion. At the start of 2024, scammers’ revenues went down even more.
However, this year started with a bull market and by March the overall capitalization of the cryptocurrency market skyrocketed as the major crypto, Bitcoin, reached three consecutive all-time highs this month. The most recent one was recorded last week, when BTC soared to $73,800. At present, Bitcoin’s market cap equals a whopping $1.2 trillion but the Bitcoin price has seen a bounce back to the $63,100 area.
While the bull market continues, and not only Bitcoin, but also Ethereum and other altcoins are on the rise, scammers target regular users, offering them a classic scheme – users get an offer to send any amount of crypto to scammers’ wallets (scammers here announce a fake giveaway or an airdrop from the name of a large cryptocurrency company – Ripple, Cardano), promising that users will receive a double amount of the same cryptocurrency immediately.
YouTube is full of such scam adverts and crypto users are indignant why this industry leader does nothing to shut down these adverts. Ripple CEO Brad Garlinghouse, Cardano founder Charles Hoskinson, MicroStrategy leader Bitcoiner Michael Saylor and even Elon Musk have been complaining publicly about this mishap on YouTube. However, these complaints are to no avail and scammers continue to reign in the world of video adverts on YouTube and videos on the X platform (formerly Twitter), luring more and more of new victims into their widely spread nets.
New AI scammer trends for 2024
In 2024, as artificial intelligence tools have been emerging and growing fast, many scammers are switching from simple deep-fake technologies to deep-fake made by AI and there you are watching leaders of the crypto industry (looking almost indistinguishable from real ones) offering you to send crypto to their “giveaway wallets” and then receive a double of that back. Fears are rising across the cryptocurrency community that within a few years, AI-generated influencers in these videos will be impossible to tell from actual people whom they copy.
Besides, scammers are launching a lot of “new tokens”. Many in the community, hoping to make a quick buck, buy into those tokens and then suffer from rug pulls, when the “developers” disappear with funds or start exiting from their own crypto by using pump-and-dump schemes.
Darknet, ransoms return as stablecoins’ role grows bigger
In 2023, following the shutdown of the Hydra market, the popularity of the Darknet began rising again, seeing new highs in criminal revenues. A big portion of illegal income comes from violating sanctions. Last year, a large portion of the overall scammers’ revenue came from that sphere – more than 61% (approximately $15 billion). These were generated by crypto transactions made by or addresses to sanctioned entities and countries and they were largely made in USDT stablecoin.
Recently, this cryptocurrency became popular among scammers and the majority of transactions were made by them in Tether’s USDT or Circle’s USDC – both backed by US dollars. Luckily, these issuers can freeze transactions and wallets. Last year in October, nearly $1 million USDT related to the wars in Ukraine and Israel were frozen by Tether.
Scammers in 2023 were in decline, according to data provided by Chainalysis – their revenues plummeted by nearly 30%. The overall number of hacks in the DeFi sphere has also seen a large decrease thanks to multiple security improvements – cyber criminals’ revenues here have dropped by almost 55%. Still, the hack of the Mixin Network was a big and a loud case with more than $200 million in cryptocurrencies lost to hackers. Euler Finance protocol also suffered from a profound hack, losing almost $200 million to cyber criminals.
Another profitable sphere for hackers last year was ransomware as con artists here grabbed a total of $1.1 billion worth of crypto. That is more than double what they got in 2022 and higher than the peak of 2021, when ransom payouts in crypto almost reached $1 billion.
Overall, since security systems have been improving, taking into account previous cases, the crypto sphere now seems to be much more protected from various cyber criminals and scammers than before. Still, it is always good to stay vigil and watch out for any threats that might be on the horizon.
