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Cryptocurrencies

Crypto crime: Scam revenues drop 65 pct since 2021 to $1.6 billion, research finds

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Total cryptocurrency scam revenue currently sits at $1.6 billion, registering a 65 percent decrease since the end of July 2021, new research from blockchain data platform Chainalysis suggests.

The firm attributed the decrease in scam revenue to the decline in prices across different currencies.

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Since January 2022, scam revenue has fallen more or less in line with Bitcoin pricing, Chainalysis said in a statement on Monday. In addition to this, the cumulative number of individual transfers to scams has hit a four-year low so far in 2022, suggesting that fewer people are falling for cryptocurrency scams than ever before.

Cryptocurrency scams typically present themselves as passive crypto investing opportunities that promise enormous returns, however the firm’s research showed that such scams have become less enticing to potential victims.

“We also hypothesize that new, inexperienced users who are more likely to fall for scams are less prevalent in the market now that prices are declining, as opposed to when prices are rising and they’re drawn in by hype and the promise of quick returns,” the company said.

Scam revenue is often driven by large outliers such as PlusToken which netted over $2 billion from victims in 2019 or Finiko which earned more than $1.5 billion in the same year.

So far in 2011, none of the scams identified by Chainalysis have approached these levels.

The top three scams identified by the firm were: JuicyFields.io, Unique-Exchange.co/PARAIBA.world, and OmegaPro.world which have received $273,935,606, $267,487,674, and $106,449,195 in scam revenues (respectively) as of July 2022.

However, the firm warned that since total scam revenue each year is so often driven by one or two large scale scams, it is possible an outlier could emerge or be identified before the end of the year and reverse the trend of declining scam revenues.

Decline in darknet market revenue

Chainalysis also noted a significant decline of 43 percent in darknet market revenue since July 2021. However, unlike with scams, this has not been the case for the entire year.

Darknet market revenue was tracking above 2021’s levels this year until April, when the rate of increase dropped. The firm attributed this sudden drop to the April 5 shutdown and sanctioning of Hydra Marketplace, which was the predominant darknet market for years, acting as a hub for the sale of hacking tools, drugs, stolen data, and money laundering services.

Following a joint operation involving several US law enforcement agencies, Germany’s federal police in April shut down the Russia-based Hydra Market, the world’s largest darknet market by revenue. Later in the day, the Justice Department followed up by indicting one of Hydra’s key operators, and the US Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Hydra, adding more than 100 of its cryptocurrency addresses to the SDN list (Specially Designated Nationals List) as identifiers.

Although it only served users in Russian-speaking countries, Hydra has been the biggest darknet market operating for the last few years, receiving more than $1.7 billion worth of cryptocurrency in 2021 alone – an amount which accounted for over 75 percent of all darknet market revenue globally.

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