Fewer people have fallen victim to crypto scams in 2022 so far due to falling asset prices and inexperienced crypto users leaving the market, a new crypto crime report reveals.
According to an Aug. 16 report from Chainalysis, total year-to-date cryptocurrency scam revenue currently stands at $1.6 billion, which is equivalent to a 65% decrease from the prior year period, which seems to be related to the decline in cryptocurrency prices.
“Since January 2022, scam revenue has fallen more or less in line with Bitcoin prices. […] It’s not just about the drop in scam revenue: the cumulative number of individual transfers to scams so far in 2022 is the lowest in four years.”
Chainalysis Cybercrime Investigation Lead Eric Jardine, author of the report, explains that crypto investors are more likely to fall for scams during bull markets when investment opportunities and outsized returns are most attractive to victims.
Jardine also hypothesized that bull markets also typically see a higher prevalence of new and inexperienced crypto users, who are more likely to fall victim to scams.
The researcher said the results are also skewed due to the comparatively large PlusToken and Finiko scams in 2021, which generated $3.5 billion in total scam revenue.
In contrast, Jardine points out that the biggest scam of 2022 so far has only raised $273 million and is related to cannabis investment platform JuicyFields.io, which has reportedly locked investors out of their accounts on its cannabis-focused “electronic grow” service.
Hacks and stolen funds
While scam revenue has declined for the year, Jardine notes that crypto-based hacking has bucked the trend, rising 58.3% through July 2022 to $1.9 billion, a figure that does not include the Nomad Bridge hack. $190 million that began on August 1.
Jardine said that this increase is largely attributed to the rise of DeFi applications that skyrocketed in 2021:
“DeFi protocols are especially vulnerable to hacking, as cybercriminals can study their open source code endlessly for exploits.”
But Jardine added that it’s not all bad, as smart contract programming languages like Solidity are relatively new and these vulnerabilities can “be useful for security, as they allow code auditing.”
The report also noted that a large concentration of these hackers came from North Korea’s elite hacking units, such as the Lazarus Group, with about half of the cryptocurrency stolen in the attacks coming from these groups alone.
Jardine also noted that darknet marketplace revenue is down 43% so far in 2022, mainly due to German law enforcement shutting down Russian darknet Hydra Marketplace servers on April 5.
Darknet markets are black markets on the dark web that offer illicit goods and services for sale, often using cryptocurrency as a payment method.