As cryptocurrency prices drop, scams become less successful

During a bear market, while the amounts stolen through scams decrease, account hacks continue to increase.

This will not be missed: the cryptocurrency market has been in a so-called “bear market” phase for a few months. This decline sharply increased during the month of May, with the collapse of the Terra blockchain.

The result of the races: The major cryptocurrency, Bitcoin and Ether, have lost as much as 70% of their value compared to their highs last November. Today, the cryptocurrency market is experiencing a period of calm, and some observers are watching the consequences of the fall of cryptocurrencies.

This fall has not only had an impact on the portfolio of investors and individuals. Crooks also saw their loot diminish. According to the latest report from the specialized firm Chainalysis, fraud revenue for 2022 totaled $1.6 billion at the end of July, down 65% from the same period (January-July) last year. And the drop in scammers’ income isn’t just due to the drop in cryptocurrency prices.

“Fewer potential victims were exploited by scams”

“Scammers’ profits are shrinking in part because there are fewer potential victims of fraud. Indeed, lower asset prices make promises of significant returns less credible. Inexperienced users, who are more likely to fall for fraud, are less likely to fall into the market when it is down. Prices,” explains Chainalysis.

The figure for 2022 is still taken into account, as the cryptocurrency market is not immune to a large-scale scam by the end of the year. Chainalysis mentions two recent major scams, by Plus Token ($2 billion stolen) in 2019 and Finiko in 2021 ($1.5 billion stolen) that turned out to be Ponzi schemes. In 2022, the biggest scam was related to Juicy Fields, a site offering to invest in medicinal cannabis with returns of up to 66%. In the end, $273 million was stolen.

Decrease in revenue on darknet

Similarly, Chainalysis noted a significant drop in darknet revenue from April, down 43% from a year ago by just over $1 billion.

“This decline is one consequence of the April 5 shutdown of Hydra Marketplace, which for years has been the dominant darknet market, serving as a hub for selling drugs, hacking tools, stolen data, or money laundering services,” the report notes.

Hacking is not about to stop

While the price drop has had an impact on scams, cryptocurrency hacks are on the rise this year, with $1.9 billion stolen in 2022 compared to $1.2 billion last year. “This trend does not look ready to reverse,” explains Chainalysis, who cites two very recent hacks: the $190 million Nomad Bridge and $5 million on the Solana blockchain.

“Moreover, we should not expect thefts to decline based on crypto market movements as scams do — as long as crypto assets held in DeFi protocol pools and other services have value and are vulnerable, bad actors will try to steal them,” Chainalysis said. . The study concluded that “the only way to stop it is for the industry to promote safety and educate consumers on how to find safe projects to invest in.”

Leave a Comment