Crypto scam revenue slips 65% amid economic downturn

Since January 2022, scam revenue has fallen more or less in line with Bitcoin pricing, reports Blockchain analysis firm Chainalysis.

“It is not just scam revenue falling — the cumulative number of individual transfers to scams so far in 2022 is the lowest it has been in the past four years,” the report mentioned.

Those numbers suggest that fewer people than ever are falling for cryptocurrency scams.

One reason for this could be that with asset prices falling, cryptocurrency scams are less enticing to potential victims.

“New, inexperienced users who are more likely to fall for scams are less prevalent in the market now that prices are declining, as opposed to when prices are rising and they’re drawn in by hype and the promise of quick returns,” the findings showed.

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The year has been tumultuous for cryptocurrency markets, with significant price declines across all currencies in May and June.

Bitcoin is currently hovering between $20,000 and $24,000 per digital coin.

“Overall, criminal activity appears to be more resilient in the face of price declines: Illicit volumes are down just 15% year over year, compared to 36% for legitimate volumes,” said the report.

The scam revenue is often driven by large outliers, such as PlusToken, which netted over $2 billion from victims in 2019, or Finiko, which netted over $1.5 billion in 2021.

So far in 2022, no scams identified thus far are approaching the level of either.

The biggest scam of 2022 so far has netted $273 million worth of cryptocurrency, just 24% of Finiko’s revenue through the end of July in 2021.

However, it’s possible “an outlier could emerge or be identified before the end of the year and reverse the trend of declining scam revenue that we currently see”.

Darknet market revenue is also down significantly in 2022, and is currently 43% lower than where it was through July in 2021.

Hacking and stolen funds activities are still going north in 2022.

Through July 2022, $1.9 billion worth of cryptocurrency has been stolen in hacks of services, compared to just under $1.2 billion at the same point in 2021.

This trend doesn’t appear set to reverse any time soon, with a $190 million hack of cross-chain bridge Nomad and $5 million hack of several Solana wallets already occurring in the first week of August.