Cryptocurrency scammers faced a sharp decline in revenue in 2022, as the price of various crypto assets fell significantly throughout the year. According to a recent report from Chainalysis, crypto scam revenue amounted to just $5.9 billion in 2022 — a 46% decrease from 2021.
The report attributed most of the decline in scam revenue to the poor market conditions, as lower crypto prices generally result in lower scam performance. However, two scam types managed to remain relatively immune to the price falls — romance scams and giveaway scams.
Yearly crypto scam revenues from 2017-2022 showed that 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.
Chainalysis pointed out that some types of scams see revenue changes increase as crypto asset prices decrease. For instance, unlike other kinds of scams, romance and giveaway scams don’t show a positive correlation with Bitcoin’s price.
Romance scams, while having lower overall revenue as a category, racked up the highest average victim deposit size in the year — with the average victim losing just under $16,000, nearly 3x more than the next biggest scam type. Romance scams typically involve building a relationship with the victim, with the scammer convincing them that they need their help.
Chainalysis said that these scam types are most likely to persist when crypto prices are down because it’s playing to a victim’s compassion rather than greed. That kind of emotional pitch is probably equally effective regardless of trends in the wider market, because the victim’s primary goal isn’t to get rich quick, but rather to help someone they believe to be a potential romantic partner.
Romance scams, and particularly pig butchering scams have been seen as a growing area of concern within the crypto space. For example, a United Kingdom investigation published on Jan. 29 found that half of all crypto companies involved with scams in the state were linked to pig-butchering scams.
Despite the overall decline in crypto scam revenue in 2022, it is clear that scammers have found ways to adapt to changing market conditions. While the majority of scams are still reliant on the performance of the crypto asset market, romance and giveaway scams have demonstrated that scammers are able to pivot and remain successful even in a bear market.
The report from Chainalysis is an important reminder for crypto users that scammers are still active and are constantly looking for new ways to take advantage of unsuspecting individuals. It is therefore important for users to remain vigilant and be aware of the various types of scams that are out there, as well as the tactics used by scammers. By understanding the different types of scams and being able to recognize the signs of a scam, users can protect themselves and their funds from becoming victims of crypto scams.
