The term ‘crypto’ seems to click all too neatly with the word ‘crime.’ But the truth, as with other forms of finance, is relative.
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Some $20.1 billion worth of cryptocurrency was associated with illicit activity in 2022. However, looked at another way, that’s just 0.24% of cryptocurrency transaction volume. Is that a lot? Well, it’s down from an unholy high of 1.9% in 2019 — but it still means that more than two cents in every bitcoin dollar traded was tainted.
Even more relative is who the scam affects. That 0.24% feels a lot more significant when it includes 100% of the contents of your crypto wallet. Common scams that can leave your wallet dry include:
- Blackmail: Scammers contact their victim threatening that they have their data or embarrassing photos and demanding payment in crypto to withhold it.
- Sextortion: Often preying on the young, a sextortionist tries to trick their victim into sharing sexual imagery of themselves and then blackmails them.
- Ransomware; Cybercriminals install malware on the victim’s device and use it to lock up their data — leaving a ransom note and requesting payment in cryptocurrency for the data’s release.
The likelihood of being targeted by one type of crypto scam or another fluctuates over time as scammers and security experts compete in an arms race to stay ahead of each other. In order to get a clearer picture of the murky underworld of the utopian crypto universe, Coin Kickoff analyzed reports on more than a quarter million bitcoin scams since 2018.
What We Did
Coin Kickoff analyzed 251,806 abuse reports from chainabuse.com and then scraped a list of all incoming transactions for each reported address from blockchain.info. We then used this data to calculate which categories of crypto scams were most commonly reported, the number of scam reports per year, the number of unique scammers per year and the value of bitcoin that scammers received each year since 2018.
Note: Bitcoin values (USD) represent the amount received from all trading by blockchain addresses that were reported for scamming and not just that received through fraud. The value of Bitcoin received per year is correct to what its value (USD) was at the time of trading.
Key Findings
- The most common form of Bitcoin scam is blackmail, with 85,534 reported scams since 2018.
- However, ransomware scams are trending ahead at the moment, with 3,376 reported between January-June 2023.
- The number of reported scammers almost halved from 23,799 to 12,354 between 2021-22. However, 2023 numbers are on track to almost match 2022’s.
- The USD value of annual receipts by Bitcoin scammers peaked at $55.04 billion in 2021.
- The average value of Bitcoin received by scammers in the first half of 2023 is $1,664,899.
Blackmail and Ransomware Among Most Common Crypto Scams
Our first chart reveals the total numbers of each category of Bitcoin scam over the past five years. Blackmail, sextortion and ransomware emerge as the three key threats. Nearly 10,000 social media scams have also been reported. These range from fake or hacked accounts offering deals to direct messages containing infected links. It stands to reason that social media is not the place where serious crypto business should be done:
“Do your homework,” suggests Dr. Marc Tomljanovich, Lombardo College of Business. “I strongly suggest that investors step away from social media to get these information sources, and only come back once they feel well informed.”
- 350+ Cryptocurrencies Listed
- <0.10% Transaction Fees
- 120 million Registered Users
- Secure Asset Fund for Users
- Earn On Deposits
- US Based
- Start with as little as $10
- Buy and sell 200+ cryptocurrencies
- Pro Solution for larger traders
- Available in 190+ countries
Click here to see the image in full size
Investment scams are also a big deal. Most recently, the disgraced NRL star Jarryd Hayne hit the headlines, having been convinced by his cellmate to invest $780,000 in Bitcoin through the cellmate’s contacts. But investment scams like this also affect regular people. Some 1,134 Bitcoin investment scams were reported in 2022 and a total of 3,365 since 2018.
Here are the figures broken down by year:
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In 2023, blackmail scams have become less common than ransomware or sextortion. And while investment scams are down as potential investors wise-up to the risks, giveaway scams are now among the top five most prevalent. The giveaway scammer posts an advert or message offering free crypto or a prize and exploits your interest to gain your trust, steal your data or install malware. The scammer will often pose as a trusted celebrity to gain credibility — most famously, legitimate money expert Martin Lewis in the UK or Elon Musk in the U.S.
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The graph above illustrates how the number of crypto scams reported has fluctuated on a monthly basis since 2018. The dramatic peak is April 2020, when 35,175 scams were reported following a massive slump in Bitcoin’s value. This period coincides with the beginning of the pandemic. More people were at home in front of their computer screens (and worrying about money). And simultaneously, the market cap of cryptocurrencies rose along with the number of Covid-19 cases, with legitimate investments also rising briefly in those early months before tailing off.
The Number of Reported Scammers is Decreasing Since 2020
Crypto scamming appears to be losing its appeal as a career path. As the chart below illustrates, the number of individual scammers reported remained steady for a couple of years after a 24% jump between 2019-20. Last year, the number halved, and 2023 looks set to be comparable to 2022 in terms of total scammers reported.
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Reported Scam Traders Received the Most Bitcoin in 2021
Our figures below represent the entire bitcoin value received by reported scammers — it may well include legitimate funds that entered their accounts. It gives an idea of the scale on which scammers have operated since 2018. Reuters reports that transactions “associated with sanctioned entities made up 44% of last year’s illicit activity,” with the source of the figures — blockchain analytics firm Chainalysis — stating that most of that activity is “likely Russian users using a Russian exchange.”
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Total scammer receipts hit peak levels in 2021 as the value of Bitcoin soared. A greater push may have been the boom in DeFi (decentralized finance) transactions and DeFi-related crime. There has since been a reduction in investment scams as crypto investment, in general, has tapered; meanwhile, law enforcement has begun to catch up with the rapid advances made in crypto tech and culture in preceding years.
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And here are those figures divided among the yearly totals of scammers. Crypto crime remains a lucrative pursuit, with scammers netting $1,664,899 each on average so far this year. Investment scams are down. Ransomware scams are likely to line the virtual pockets of crypto criminals further as they raise their ransom prices for those willing to pay, in order to counter the increased resistance against paying ransoms by those who refuse.
How to Defend Against Crypto Scams
Seen from afar, crypto scams are complex and sophisticated, tied up in obscure financial markets and global geopolitics. As Senator Elizabeth Warren has pointed out, the “dark underbelly of crypto is its critical link in financing terrorism, human trafficking, drug dealing, and helping rogue nations like North Korea and Iran.”
But seen up close, crypto scams are an expensive and sometimes life-ruining nuisance that largely depends on the foibles of human nature, be it the willingness to click an enticing link on social media or to trust an “investor” who you never hear back from. To stay secure, keep in mind these precautions:
- Distrust “guaranteed returns” and offers that seem too good to be true.
- Resist high-pressure sales techniques.
- Install anti-malware software on all your devices.
- Act quickly if you believe you’ve been scammed.
Don’t let yourself become a crypto crime statistic.
METHODOLOGY & SOURCES
To discover the most common types of scams involving cryptocurrency, we collected and analyzed 251,806 abuse reports from chainabuse.com, which were linked to 87,722 distinct blockchain addresses. After removing duplicate reports from the same user about the same fraud with the same blockchain address, we were left with 232,455 unique reports related to crypto abuse between 2018 and June 2023.
Next, we scraped a comprehensive list of all incoming transactions for each reported address from blockchain.info.
Using the information from these two sources and focussing on reports made since 2018, we calculated which categories of crypto scams were most commonly reported, the number of scam reports per year, the number of reported unique scammers per year and the value of bitcoin that reported scammers had received each year according to their blockchain.info profile.
Bitcoin values (USD) represent the amount received from all trading by blockchain addresses that were reported for scamming. The figures do not represent the exact amount received specifically from fraudulent acts. The value of Bitcoin received per year is correct to what its value (USD) was at the time of trading.
This data analysis is correct as of August 2023.
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