According to a recent report by blockchain intelligence firm Chainalysis, cryptocurrency scams have seen a significant decrease of 77%, dropping from $3.3 billion to $1.1 billion during the first half of 2023. However, the report highlights a concerning trend as ransom attacks experience a resurgence, with perpetrators generating 62.4% more revenue compared to the same period in 2022.
Chainalysis Report Findings
Chainalysis released its Mid Year Crypto Crime report on July 12, emphasizing that this decline in scam revenue is unusual given the historical correlation between bull markets and increased scam activity. The firm points out that decreased transaction volumes do not fully explain the drop, as inflows into known illicit entities fell 65% and risky entities experienced a 42% decline in the first six months of 2023.
Kim Grauer, director of research at Chainalysis, suggests that past scam victims may have become more cautious in their investment decisions, reducing their vulnerability to scammers. She also credits government, industry awareness campaigns, and media reporting for educating people about the risks associated with scams.
Resurgence of Ransom Attacks
While overall scam revenue has declined, ransomware attacks have seen a significant increase, rising by 62.4% to reach $449.1 million in the first half of 2023. Chainalysis explains that attackers are now “big game hunting,” specifically targeting deep-pocketed organizations to extract the highest possible amount of money. This trend parallels a lull in ransom attacks observed in 2022.
Chainalysis warns that artificial intelligence tools, including deepfakes, may be employed more frequently in promoting scams. The firm highlights romance and pig butchering scams as particularly vulnerable to AI-based techniques due to their reliance on text-based communication.
Increasing Payment Sizes and Future Outlook
The report also mentions that payment sizes extracted by the largest ransomware perpetrators have increased substantially. Chainalysis quotes Risk Officer Andrew J. Davis of cybercrime consulting firm Kivu, who attributes the decline in 2022 to improved cybersecurity practices and stricter laws against paying ransoms. As a result, ransom attackers are now focusing on extracting the maximum amount from willing victims.
It is worth noting that these figures represent a “lower bound estimate,” and as new illicit activities are discovered, both illicit and risky transaction volumes are expected to increase. Additionally, the data does not include crypto-related crimes where cryptocurrency is used as a mode of payment.
As the crypto industry evolves, it becomes crucial for individuals and organizations to stay vigilant against evolving threats. The rise of ransom attacks emphasizes the need for robust cybersecurity measures and continued awareness campaigns to mitigate the risks associated with cryptocurrency transactions.