Ransomware attacks are becoming a major problem in the cryptocurrency ecosystem.
Blockchain intelligence firm, Chainalysis, reported a significant 77% reduction in cryptocurrency scams in the first half of 2023, plunging from $3.3 billion to a modest $1.1 billion.
However, the alarming resurgence of ransom attacks degrades this promising statistic.
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The Mid Year Crypto Crime report by Chainalysis, released on July 12th, marked the second consecutive year of declining scam revenue.
Despite bullish market conditions typically boosting scam revenue as market enthusiasm and FOMO vulnerability rise, 2023 has bucked this trend. The report stated:
Usually, positive price movements translate to higher scam revenue, likely because increased market exuberance and FOMO make victims more susceptible to scammers’ pitches. But 2023’s drastic scam decline bucks that long-standing trend.
Comparing the first six months of 2023 to the same period last year, inflows to known illicit entities fell by 65%, and inflows to risky entities, like cryptocurrency mixers and high-risk exchanges, dipped by 42%.
Although Chainalysis partially attributes this decline to a decrease in transaction volumes overall, illicit inflows have been dropping at a more rapid pace, stating:
Transaction volumes are down across the board, but declines are much less severe for legitimate services, which have seen just a 28% drop in inflows.
Kim Grauer, the Director of Research at Chainalysis, suggests that past scam victims may be exercising more caution with their investment decisions, thereby reducing scam revenues.
However, the report warned of the potential future use of AI tools, such as deepfakes, in scam promotion, noting:
Given the growing prominence of romance and pig butchering scams, one thing to look out for is the use of AI to increase effectiveness and scale, since those scams are largely text-based.
While scams have decreased, ransomware revenue soared by 62.4% to $449.1 million in the first half of 2023. Chainalysis attributes this to ransom attackers' shift in strategy towards "big game hunting," targeting large organizations rather than small investors.
The 2023 figures so far have put the ransom attackers on track for their second most lucrative year, lagging only 4.6% behind 2021's full-year figure of $940 million.
While the marked reduction in cryptocurrency scams is a positive step forward, the rising trend of ransom attacks signals the need for continual vigilance and improved security measures within the crypto sector.
The amount of crypto-related scams has been decreasing since the beginning of 2023. However, TRM Labs urged crypto investors to stay vigilant.
