The Chainalysis 2024 Crypto Crime Report has been released, sharing original research on the latest trends in crypto crime.
As a proud user of the Chainalysis toolkit, it’s great to see clear wins facilitated by blockchain forensics in collaboration with law enforcement across global cybercrime activities. We hope to see these efforts continue to grow, and the BlockFo team remains committed to cultivating security and trust in the digital space.
For this blog, we have focused on scam data and what this means for our community.
Here are BlockFo’s key insights into the Chainalysis 2024 Crypto Crime Report.
Overall decrease in illicit activity
The overall picture was positive, with a decrease in illicit activity as a whole. In 2023, $24.2B was received by illicit addresses (down from $39.6B). This made up 0.34% of total on chain transaction volume (down from and 0.42%).
Scamming and hacking revenue falls
Again, a positive shift, with scamming revenue down 29.2% and hacking revenue down 54.3%. Chainalysis’ on-chain metrics suggest scamming revenues globally have been trending down since 2021, which reflects the correlation with market performance.
We mention this because although the news is positive for the 2024 report, as we move into a period of growth we are likely to see this change direction. With this in mind, it’s more important than ever to remain vigilant and take every precaution to keep our assets safe!
“This aligns with the long-standing trend that scamming is most successful when markets are up, exuberance is high, and people feel like they are missing out on an opportunity to get rich quickly”.
Chainalysis, 2024 Crypto Crime Report
The rise of Romance Scams
Crypto scams may be down on the whole; however, they continue to be one of the key drivers of crypto crime. Associated wallets brought in $4.6 billion last year, and romance scams show the most significant growth.
More than doubling revenue (year-on-year), romance scam activity has grown by a staggering 85x since 2020. This is a cause for concern when we consider romance scams have the worst impact of all scam types based on the average size of payments.
Targeted approval phishing scams are also one to watch. The data reports explosive growth over the last two years, with at least $374 million suspected stolen in 2023. This is a complex scam, which we will look at in more detail in future posts.
Cybercriminals are Adapting
There has been a notable shift towards more sophisticated tactics. Scammers prefer to build relationships with victims before pitching fake opportunities. This makes sense because personal relationships are harder to trace or notice in the marketplace. Rather than advertising far and wide, scammers are taking advantage of 1:1 relationships, which can be harder to uncover and rely on victims reporting the crime.
Shift in assets from Bitcoin to Stablecoins
Bitcoin previously reigned as the cryptocurrency of choice among cybercriminals. That has changed since 2022, with stablecoins now accounting for the majority of all illicit transaction volume. We expect this to be out of necessity, as Bitcoin is now mostly stored on ledgers, Centralized Exchange platforms and custodians like BlackRock. Stablecoins continue to be more heavily used on noncustodial wallets, which are unfortunately easier to hack.
On Chain and Off Chain Data – Completing the Puzzle
Romance scams often take place off chain, with scammers requesting payments in fiat (then converted to crypto). With this in mind, the true impact may not be visible with the metrics of the Chainalysis report.
Many victims do not report these crimes, and we would fully encourage anyone who has experienced a scam to come forward. Every aspect of the scam is important, and off chain data can often be the missing piece of the puzzle.
Human Trafficking – Ransoms and Romance Scams
KK Park is one of the biggest, most notorious romance scam compounds in operation today. The site is reported to hold over 2,000 trafficked romance scam workers. This highlights the complexity of the crypto crime ecosystem, where the scammers are in fact victims themselves. These “pig butchering” gangs often ask the families of trafficked workers to pay ransoms in exchange for an individual’s freedom. Chainalysis’ on-chain data shows how tightly interwoven these ransom-taking operations are with romance scam funds secured by workers.
“The conditions these people face are horrible. They’re forced to work 12 or more hours per day, and if they don’t meet quotas on contacting potential scam victims, the gangs beat them, torture them, and even withhold food.”
Eric Heintz, Global Analyst at the Global Fusion Center of the International Justice Mission
Centralized Exchange Responsibility
Centralized Exchanges (CEX) remain the primary destination for illicit funds, further highlighting their responsibility to cooperate with law enforcement to bring cyber criminals to justice. As decentralized exchange (DEX) platforms are transparent by nature, they are less attractive as a mode for obfuscating funds, which offers an advantage on both sides.
On a DEX, blockchain forensics can follow the on-chain movements of funds to trace perpetrators.
On a CEX, unlike a DEX, centralized exchanges have the power to freeze assets. As analysts and legal services collaborate to build cases against criminals, we empower exchanges to take this action.
Blockchain Forensics – The Future of Crypto Security
We are proud to be a part of the international blockchain forensics community, who play a crucial role in identifying and disrupting criminal activities. International collaboration is proving a winning method to bring cybercriminals to justice, and we hope to see this continue to grow. It’s clear that collaboration between the public and private sectors is essential in combating cryptocurrency-related crime, with exchanges and law enforcement agencies working together to identify and report suspicious activity.
Read the full Chainalysis 2024 Crypto Crime Report here.
Contact Us
If you think you may have fallen victim to a crypto scam, our team are available to assist. Contact our experts promptly to open your case today.
