Last year was less profitable for crypto scammers as their revenue plunged nearly 50% in 2022, according to a new study by blockchain analytics firm Chainalysis.
The blockchain company noted that the decrease in revenue could be linked to the decline in the value of cryptocurrencies due to the correlation of most scam types with bitcoin’s price.
Crypto Scam Revenue Dropped to $5.9B in 2022
Crypto scam revenue started 2022 on an upward trend but came spiraling down in May at the onset of the bear market following the Terra ecosystem collapse. It retained the downward motion until the end of the year.
From a record of $10.9 billion in 2021, crypto scam revenue dropped to $5.9 billion. Due to the relationship between several heist types and bitcoin’s price movement, victims were reluctant to spend their funds as the asset crashed further.
Notably, the majority of scams in 2022 were investment types, and as a category, they generated the most revenue last year despite the overall decline. On the other hand, romance scams stuck to a different revenue pattern and had no drop, despite having lower overall revenue as a category.
Romance scams, which involve building emotional bonds with victims and soliciting their help after a while, had the most devastating revenue-per-victim record. With an average victim deposit of roughly $16,000, they surpassed the next-closest category by three times.
“The reason for the difference likely lies in how the scams are pitched to victims. Investment scams typically promise users outsized investment returns, often based on an algorithmic, ‘can’t lose’ trading strategy. That pitch is probably more likely to succeed when the asset prices are growing, and the news is filled with stories of crypto investors striking it rich,” Chainalysis said.
Same Groups Control Majority of Crypto Scams
The blockchain analytics firm also found that most of the scams appeared to be controlled by the same individuals or groups.
The study outlined patterns of scams receiving significant amounts of funds from other illicit addresses, indicating a link between the entities.
Notably, over 200 fraudulent websites contained identical information related to some Commodity Futures Trading Commission (CFTC)-sanctioned entities.