AI Boosts Crypto Scams to Potential Record High in 2024, According to Chainalysis
The rise of cryptocurrency scams in 2024
The year 2024 saw a significant increase in cryptocurrency scams, with revenue reaching record highs, according to a report by blockchain analytics firm Chainalysis. One of the key factors driving this increase was the prevalence of “pig butchering” scams, where scammers build relationships with individuals to lure them into fraudulent schemes.
Revenue from pig butchering scams increased by nearly 40 percent in 2024 compared to the previous year, highlighting the growing sophistication of these fraudulent operations. Chainalysis estimated that the total revenue from crypto scams in 2024 was at least $9.9 billion, but this figure could potentially rise to a record high of $12.4 billion as more data becomes available.
The impact of generative artificial intelligence
One of the key factors contributing to the rise of cryptocurrency scams in 2024 was the increasing use of generative artificial intelligence (GenAI). This technology has made it easier and cheaper for scammers to expand their operations and potentially “exponentially scale crypto scams,” according to Chainalysis.
The company pointed to the emergence of marketplaces that support pig butchering operations as well as the use of GenAI as significant drivers of the increased sophistication of crypto fraud. As a result, scam activity has grown by an average of 24 percent each year since 2020, posing a growing threat to investors and consumers in the cryptocurrency space.
Lucrative scams and key hotspots
In addition to pig butchering scams, other particularly lucrative schemes identified by Chainalysis in 2024 included crypto drainers and high-yield investment scams. Crypto drainers typically involve scammers posing as legitimate blockchain projects to gain control of victims’ crypto wallets, while high-yield investment scams promise outsized returns to lure unsuspecting investors.
Furthermore, cryptocurrency ATMs have emerged as key hotspots for scams, with perpetrators often impersonating government officials or customer support agents to deceive victims into depositing cash into the machines. These tactics have proven to be highly effective in defrauding individuals of their hard-earned money.
Looking ahead
As the cryptocurrency market continues to evolve and attract more investors, the threat of scams and fraudulent activities is likely to persist. Chainalysis’s report serves as a stark reminder of the importance of staying vigilant and conducting thorough due diligence before engaging in any crypto-related transactions.
With the proliferation of advanced technologies like GenAI, scammers are finding new ways to exploit unsuspecting individuals and capitalize on the growing popularity of cryptocurrencies. It is crucial for regulators, law enforcement agencies, and individuals to work together to combat these threats and protect the integrity of the cryptocurrency ecosystem.