Study Sheds Light on Dominant Crypto Scams of 2023

Crypto scams, predominantly in the form of ransomware and blackmail, have raised concerns, even as the cryptocurrency market promises cutting-edge innovation.

A recent study by Chainanalysis indicated that, despite crypto scam revenue declining by around $3.3 billion in the first half of 2023 to just above $1.0 billion, ransomware issues persisted. Attackers managed to pocket about “$175.8 million more” in these six months than they did in 2022.

Data from the third quarter of 2023 revealed a staggering 60% rise in crypto-related fraudulent activities compared to the same timeframe in 2022, leading to nearly $686 million in losses. The Mixin hack on Sep. 25 stood out, resulting in a loss of around $200 million.

A Glimpse into 2023’s Most Prevalent Crypto Scams

CoinKickOff’s fresh report provided insights into the predominant scams of 2023. After evaluating 232,455 unique reports from chainabuse.com, they noted that blackmail scams have been at the forefront since 2018 with 85,534 cases. Yet, ransomware scams took the spotlight in the first half of 2023 with 3,376 cases.

Interestingly, while investment scams have seen a decline, giveaway scams have found their way into the top ranks. These scams entice victims with offers of free cryptocurrency or other rewards, often under the guise of trusted figures like the UK’s Martin Lewis or the US’s Elon Musk.

Tracing the crypto scam landscape since 2018, the report highlighted a surge in scams during April 2020, in sync with Bitcoin’s value decline and the pandemic’s emergence. However, there was a notable decrease from 23,799 to 12,354 in scam reports between 2021 and 2022, with 2023’s figures looking similar to 2022’s.

Scammers operating in the Bitcoin space pocketed their highest at $55.04 billion in 2021. In 2023’s first half, the average amount scammers received in Bitcoin was $1,664,899.

Decoding the Scammers’ Playbook

Scammers’ tactics have evolved over time, using impersonation, deception, and other tricks. The cryptocurrency platform Wormhole, for instance, was targeted using a vulnerability in its smart contract system, losing 120,000 Wrapped Ethereum (WETH).

The notorious Lazarus Group, recognized for cyber espionage, has shown interest in decentralized finance (DeFi) protocols, employing advanced malware techniques to breach security.

Phishing scams exploit human emotions and trust. Victims are lured by promises of substantial returns, but their investments are diverted for the scammers’ benefits. The limited know-your-customer (KYC) protocols in the crypto industry have further complicated matters, allowing scammers to operate anonymously.

Guarding Against Deception in the Crypto World

Navigating the cryptocurrency world safely requires caution and knowledge. Here are some pointers:

Stay Educated: Understand prevalent scams, such as those promising rapid profits on fraudulent websites.
Verify Thoroughly: Scammers often mimic legitimate platforms. Always recheck website URLs to ensure authenticity.
Maintain Skepticism: If an offer appears overly lucrative, approach with suspicion.
Prioritize Security: Choose established cryptocurrency wallets and exchanges with stringent security protocols.
Report Malpractices: Encountering a scam or suspicious activity? Report to agencies like the Federal Trade Commission (FTC), the U.S. Securities and Exchange Commission (SEC), local law enforcement, or the FBI Internet Crime Complaint Center.

By staying informed and vigilant, individuals can traverse the crypto realm securely and help others by reporting dubious activities.

AUTHOR:

TheBoomReport || October 14, 2023

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Study Sheds Light on Dominant Crypto Scams of 2023