Crypto fraud has coincided with the price of Bitcoin

Kim Grauer – research director at Chainalysis – said that there has been a “withdrawal” in funds received by fraudulent addresses with cryptocurrency under the bear market. Other forms of economic crime in the digital resource world, such as ransomware, do not reflect the same trend.

Scams Track the market

Som Grauer explained to Yahoo Finance on Thursday, fraud is the largest subgroup of criminal activity on the blockchain. Chain analysis data shows that fraud was the largest source of income for criminals in 2021, providing $ 7.7 billion in 2021 alone.

Although he was still a “package leader” in 2022, the director noted that their prevalence tends to expand and shrink along with the broader crypto market. Thus, with the price of Bitcoin caught in a consistent downward trend throughout the year, fraud has in turn been less successful.

Grauer believes the connection is only natural. “[A scam] is someone willing to part with their money in the hope of seeking a higher return. “

“You can compare it to something like a ransomware, where there is not really a market base for the amount of ransomware attacks there are,” she added. “It really just happens continuously all the time.”

The fraud ecosystem also evolves with each market cycle. Law enforcement learns to proactively crack down on related schemes.

That said, scammers’ methods are also becoming more sophisticated with each cryptocurrency winter. Romance scams with cryptocurrencies and fraudsters from business / government gave over $ 300 million from victims from January 2021 to March 2022.

At present, investment fraud is still the most common and profitable in the industry. Grauer advised investors to watch out for projects with anonymous founders who promise unrealistic returns when considering these schemes.

At the end of October, an anonymous party pretended to be affiliated with the popular Netflix series “Squid Game” “Squid Game Token”. After charting astronomical gains after the launch, investors were finally pulled on the tough while the founders disappeared with barely a word.

The growth of ransomware crime

Ransomware is malicious software used to block a victim’s computer access or threaten to publish their personal data until they lose a sum of money. Cryptocurrency is extremely popular as a payment method in such schemes, as it allows extortionists to remain anonymous and keep their transactions irreversible.

Ransomware raised more than $ 602 million for scammers in 2021, according to official figures from Chainalysis in February. The actual number is expected to be higher.

In August, political comedian John Oliver targeted the Monero privacy coin to implicitly support ransomware attacks through marketing. “There’s a pretty clear subtext to what they’re selling there,” he said in response to one of the ads.

While cryptocurrency weighs heavily on regulators and saviors, some statistics suggest it is not worthy of the coverage it receives. As the US Treasury Department admits, fiat money is still far greater than Bitcoins for money laundering. Furthermore, a Chainalysis report in February showed that the proportion of illegal transactions in crypto trends is much lower each year.