Research from Chainalysis, the blockchain data company, has revealed worrying signs about the growth of crypto scams in China. Forty-three per cent of fraudulent inflows have gone to wallets that only became active this year, the highest amount of year-to-date (YTD) inflow into new wallets.
Previously, the highest number of scams in new wallets was 29.9 per cent in 2022. Interestingly, while crypto scams might be on the rise, their lifetime has actually decreased. According to the second part of the Mid-Year Crime Update, in 2020, scams that started at the beginning of the year lasted 271 days. Meanwhile, for scams beginning in 2024, the longest they have lived is 42 days.
Eric Jardine, cybercrime research lead at Chainalysis
“Taken together, these two data points strongly suggest that scammers are pivoting away from elaborate ponzi schemes that cast a wide net, to more targeted campaigns like romance scams or address poisonings,” explained Eric Jardine, cybercrime research lead at Chainalysis.
Earlier this year, in its 2024 Crypto Crime Report, Chainalysis researchers estimated that based on average payment size, romance scams – also called pig butchering scams – have had the worst impact on victims, of all scam types.
Also concerningly, the company’s data suggests that this type of scam activity has grown by 85x since 2020. From 2022 to 2024, just one such organisation, a popular fraud shop, received $10.5million from scammers known to perpetrate romance scams. With this shop selling ‘seasoned’ social media profiles for anything between $5 to $20 per account, scammers could have purchased between 525,000 and 2.1 million social media profiles they could then use to target victims.
Evolving fraud trends
“The pivot away from ponzi schemes implies that victims are being targeted now. Especially through interpersonal channels, such as social media or text messages. On one level, this sort of tactical shift both makes scammers harder to track and makes victim restitution somewhat more challenging. Saying that, there are clear cases involving asset freezes and law enforcement intervention that show how victims can still be made whole,” added Jardine.
“This also serves as a reminder that while it’s easy to write off targeted scams, especially romance scams, as ‘something that won’t happen to me’, any individual can be a target. It is therefore important to stay on guard and be especially wary of communications from people you weren’t expecting to hear from – no matter how innocent their messages may seem. Engaging in a dialogue isn’t necessarily a sign of a scam, but any request for a transfer of money should immediately raise red flags.”
Moreover, as Chainalysis has demonstrated, the transparency of blockchains has proven to be an incredibly powerful tool in understanding and uncovering the modus operandi of cybercriminals. “We closely monitor the crypto crime ecosystem, in collaboration with our partners, to shine a light on illicit activity. In doing so, we will continue to work with law enforcement agencies and cryptocurrency exchanges with the intelligence and tools to disrupt and prevent these scams,” concluded Jardine.
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