Due mostly to declining prices for crypto assets, revenue from crypto scams was reduced by almost half in 2022, although two scam types managed to survive.
Revenue from cryptocurrency fraud in 2022, which includes investment fraud, NFT fraud, and romance fraud among others, was $5.9 billion, a 46% decrease from 2021.
The information was derived from a crime report released by Chainalysis on February 16; the research ascribed the majority of the fall in scam revenue to unfavorable market circumstances since lower crypto prices often lead to weaker scam performance.
Nevertheless, Chainalysis identified two distinct scam categories that remained mostly unaffected by the price declines: romance scams and gift scams.
“Scam revenue throughout the year tracks almost perfectly with Bitcoin’s price, consistently maintaining a three-week lag between price moves and changes in revenue. However, not every distinct type of scam follows this pattern — some types of scams see revenue changes increase as crypto asset prices decrease,” the firm added.
While they generated less money overall as a category, romance scams had the largest average victim deposit amount in the year, with the typical victim losing just under $16,000, almost three times more than the next most common fraud.
Often, in romance scams, the con artist gets to know the victim and then persuades them that they need their assistance.
According to Chainalysis, these scams are more likely to continue while cryptocurrency values are low because they appeal to the compassion rather than the greed of the victim.
Because the victim’s main objective is to aid someone they consider to be a possible love partner, rather than to quickly get wealthy, the business argued that this type of emotional pitch is likely equally successful regardless of trends in the larger market.
Scams using romance, in particular “pig-butchering” schemes, have been noted as an increasing threat in the cryptocurrency world.
For instance, a UK study released on January 29 indicated that half of all cryptocurrency organizations engaging in fraud in the state were connected to schemes involving pig-butchering.