Crypto Fraud Becomes Unprofitable
2023.02.17 03:22
Crypto Fraud Becomes Unprofitable
By Tiffany Smith
Budrigannews.com – In 2022, revenue from crypto scams fell by almost half, primarily as a result of falling prices for crypto assets. However, two types of scams remained unaffected.
The year 2022 saw a decrease of 46% in revenue from crypto scams, which included investment scams, NFT scams, romance scams, and others, to $5.9 billion.
According to a Chainalysis crime report from February 16, the majority of the decline in scam revenue was attributed to poor market conditions, as lower crypto prices typically lead to lower scam performance.
However, Chainalysis identified two distinct types of scams that remained relatively immune to the price drops: giveaway scams and romance scams.
“Over the course of the year, scam revenue has consistently followed a three-week lag between changes in revenue and changes in Bitcoin’s price. However, this pattern does not apply to all distinct scams; in fact, some scams see an increase in revenue as crypto asset prices fall,” the company explained, adding:
“Romance and giveaway scams, for example, do not show a positive correlation with Bitcoin’s price,” in contrast to other types of scams.
Despite their lower overall revenue, romance scams had the highest average victim deposit size of the year, with the average victim losing just under $16,000, nearly three times more than the next largest type of scam.
Romance scams typically involve the perpetrator developing a relationship with the victim and convincing them that they require their assistance.
According to Chainalysis, these scams are more likely to persist when crypto prices are low because they target compassion rather than greed in the victims.
The company wrote, “That kind of emotional pitch is probably equally effective regardless of trends in the wider market, because the victim’s primary goal is to help someone they believe to be a potential romantic partner rather than getting rich quickly.”
Scams targeting romance, particularly “pig-butchering” scams, have emerged as a growing source of concern within the cryptocurrency industry.
For instance, a report from the United Kingdom that was released on January 29 found that half of all crypto companies involved in state-sponsored scams had a connection to pig-butchering scams.
