Crypto Scams Fall Drastically After Noobs Exit Market, Report Says

Crypto scams fall drastically after noobs exit the market, according to a recent crypto crime study, which found that fewer individuals have been scammed by crypto so far in 2022 due to declining asset prices and the exodus of new crypto users.

The total amount generated by scams in the cryptosphere to date is currently estimated to be $1.6 billion, according to a Chainalysis report published on August 16. This is a 65% drop from the same time last year, which is attributed to the depreciating value of cryptocurrencies.

“Since January 2022, scam revenue has fallen more or less in line with Bitcoin pricing. […] it’s not just scam revenue falling — the cumulative number of individual transfers to scams so far in 2022 is the lowest it’s been in the past four years.”

Crypto Scams Fall Drastically After Noobs Exit Market

Eric Jardine, the author of this report who is the Cybercrimes Research Lead at Chainalysis, stipulates that scams against crypto investors are more likely to be successful during bull markets when victims are most attracted to investment opportunities and outsized rewards.

Jardine also proposed that during bull markets, the number of new, novice crypto users is often larger, increasing their vulnerability to frauds.

The analyst said that the relatively significant PlusToken and Finiko frauds in 2021, which generated $3.5 billion in total scam income, distort the statistics.

The biggest fraud of 2022, according to Jardine, has so far only garnered $273 million and is associated with the cannabis investment site JuicyFields.io, which has purportedly locked investors out of their accounts on its cannabis-focused “e-growing” service.

Hacks And Stolen Money

Jardine notes that while scam income has fallen this year, cryptocurrency-based hacking has withstood the trend, increasing by 58.3% to $1.9 billion through July 2022 (a figure that excludes the $190 million Nomad bridge assault that began on August 1).

According to Jardine, the surge of DeFi applications that began in 2021 is primarily to blame for this increase:

“DeFi protocols are uniquely vulnerable to hacking, as their open source code can be studied ad nauseum by cybercriminals looking for exploits.”

Although Solidity and other programming languages for smart contracts are still in their infancy, Jardine noted that this isn’t entirely bad and that these attacks may actually be beneficial for security as it enables code audits.

In addition, according to Jardine, German law enforcement shut down the Russian darknet Hydra Marketplace’s servers on April 5, which resulted in a 43% drop in darknet market revenue thus far in 2022.

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