Crypto scams plummet as ‘inexperienced’ investors abandon market – study

‘Fewer people than ever are falling for cryptocurrency scams,’ Chainalysis says

A report published on 16 August, 2022, shows crypto scams have plummeted in tandem with the price of bitcoin (iStock/ Getty Images)

Crypto scams have plummeted in tandem with the price of bitcoin and other cryptocurrencies in 2022, according to new figures.

Total scam revenue in the first seven months of 2022 fell by 65 per cent compared to the same period last year, analysis from blockchain data platform Chainalysis revealed.

The overall crypto market fell by a similar amount between January and July this year, as bitcoin and other cryptocurrencies suffered prolonged price declines.

Chainalysis attributed the decline in successful scams to “inexperienced” investors leaving the market; The numbers suggest “fewer people than ever are falling for cryptocurrency scams” due to scams being less enticing to potential victims due to price drops.

“We also hypothesize that 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,” wrote Eric Jardine, the cyber crimes research lead at Chainalysis, in a blog post.

“Nobody likes a crypto bear market, but the one silver lining is that illicit cryptocurrency activity has fallen along with legitimate activity, albeit not as sharply.”

The amount of revenue generated by crypto scammers remains significant, with $1.6 billion tracked by Chainalysis to scammers accounts.

The largest scam of 2022 so far, known as Finiko, netted $273 million worth of cryptocurrency, while two other scams raised more than $100 million.

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Another trend spotted by Chainalysis was the drop in dark web revenue in the first half of 2022, which was 43 per cent lower than the first half of 2021.

This is almost certainly due to the shutdown of the Hydra marketplace, which was the biggest illicit online market for drugs, hacking tools and stolen data.