How Fraudsters Adapted to Crypto Winter: Chainalysis
Fraudsters adapt better than we can imagine and change depending on the market situation. This disclosure was made in a recent webinar hosted by prominent blockchain analytics firm Chainalysis, where it measured industry market crime trends during the crypto winter. The data collected by the firm revealed how fraudsters adapted to the evolution and volatility of the crypto market.
Not all scams behaved in the same way in the context of the bear market. This time it was free giveaways and romance scams that managed to pull money from victims’ pockets.
Scammers Post Terra Collapse
The data collected by Chainalysis demonstrated ways fraudsters adapted to the evolution and volatility of the crypto market. According to the firm’s head of cybercrime research, Eric Jardine, Terra’s catastrophic collapse last May forced these fraudulent entities to switch strategies.
The fall of the algorithmic stablecoin and the subsequent contagion spooked investors who remained mostly reluctant to invest in projects.
As a result, investment scams were not as successful as they used to be when the market was rising. “Playing the same script over and over again” did not make sense and it was during this time that scammers resorted to baiting victims by targeting their greed with free handout scams. Romance scam was another ploy to steal money.
Exec stated,
“This indicates that there is an adaptation on the part of the fraudsters, and the market conditions mean that investment fraud is unlikely to be profitable; they can substitute their tactics against other scams that play on a different emotional sensibility.”
Crypto Scams: 2021 to 2022
Total revenue from digital asset fraud nearly halved from nearly $11 billion in 2021 to $5.9 billion in 2022. Revenue from ransomware attacks also fell by 40.3% to at least $456.8 million in 2022 from $765.6 million dollars in 2021. increasing reluctance among victims to pay ransom attackers rather than a decrease in the actual number of exploits.
However, another type of fraud has gained ground – multi-level marketing fraud – which accounted for the majority of stolen funds last year. Also, nearly $1.3 billion of the crypto fraud proceeds were brought in through hyperverse fraud.
