Blockchain data analytics firm Chainalysis published its 2023 Crypto Crime Report this week, revealing that total cryptocurrency scam revenue dropped by 46% in 2022, falling from $10.9 billion in 2021 to just $5.9 billion last year. The firm attributes the majority of this decline to deteriorating market conditions, noting that scam performance typically worsens when cryptocurrency prices fall.
Scam Revenue Closely Tracks Bitcoin Prices
Chainalysis tracks multiple types of crypto scams, including giveaway scams, impersonation scams, investment scams, NFT scams, and romance scams. The report shows that scam revenue started 2022 trending upward, but plummeted in early May — coinciding with the onset of the bear market following the collapse of Terra Luna — and then declined steadily for the rest of the year. “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,” the report states.
Pig Butchering Scams Remain a Concern
While the overall decline is significant, Chainalysis notes that its figures are “a lower-bound estimate” because the true amount lost to fraudsters will grow as more scam-associated addresses are identified. The firm specifically highlights the rise of “pig butchering” scams, which have become alarmingly popular. The Federal Bureau of Investigation (FBI) warned about these scams multiple times in 2022 and seized seven domains used by pig butchering scammers last November.
Chainalysis explains that the decline in scam revenue is largely tied to market conditions: “Cryptocurrency scam revenue began the year trending upwards, but plummeted in early May — the same time the bear market set in following the collapse of Terra Luna — and then declined steadily throughout the rest of the year.” The report adds that although some types of scams see revenue increases when crypto asset prices decrease, the overall trend is downward.
Notably, NFT scams and investment fraud were particularly prominent in 2022, capitalizing on the hype around digital collectibles and promising high returns. Romance scams, where fraudsters build fake relationships on social platforms before soliciting crypto, also continued to victimize users. Despite the overall drop, Chainalysis warns that crypto crime remains a serious threat, especially for new investors who may fall for impersonation schemes or fake giveaway offers.
In conclusion, the 46% decline in scam revenue highlights the strong correlation between cryptocurrency market cycles and fraudulent activity. While the bear market provided some respite from scammers, the firm cautions that as prices recover in 2023, scam revenue could rebound. The full report is available on Chainalysis’s website.