The fall in the price of cryptocurrencies has its good sides. As the value of Bitcoin, Ether, and most altcoins has fallen sharply, scammers are running out of potential victims. Scam revenue has plummeted since the start of the year.
Cryptocurrency scams made less money to scammers in 2022 than last year, reveals a report from Chainalysis, one of the specialists in blockchain analysis. Between January and July 2022, criminals amassed $1.6 billioni.e. 65% less than the same period in 2021.
This decrease results from the collapse of the cryptocurrency market. Since the end of last year, the value of digital currencies has contracted sharply. King Bitcoin fell back below $25,000, a far cry from its November 2021 high ($69,000). Most altcoins also crashed, mimicking stock market values.
” Nobody likes a bear market, but the only silver lining is that illicit activity involving cryptocurrencies has plummeted notes Chainanalysis.
A dearth of potential victims
As Chainalysis points out, “ scam receipts have declined more or less in line with the price of Bitcoin”. Moreover, it appears that the number of people who have fallen into the traps of cybercriminals has decreased significantly. The number of transfers to scam addresses has reached its lowest level in four years.
Eric Jardine, head of cybercrime research at Chainalysis, believes that fewer and fewer “ new inexperienced users », the core target of criminals, flock to the market. As always, neophytes enter the world of crypto-assets when prices are on the rise. A study by Statista shows that the adoption of cryptocurrencies has also accelerated considerably in 2021.
When the market is contracting, individuals who dream of wealth are not interested in the sector. In this bearish environment, the scammers, who promise ” huge yields » in the context of passive investments, face a shortage of potential victims. Difficult to lure investors in search of fortune when prices have collapsed. The bad press surrounding the Luna crash or the Celsius platform bankruptcy may also have contributed to keeping new entrants away.
At the same time, the black markets of dark web have also experienced a decline in their income. Marketplace profits have collapsed 43% since April 2022. Chainalysis experts attribute the decline to dismantling of Hydra Marketone of the largest markets on the dark web.
Launched in 2015, the Russian site had 17 million customers. There were mostly guns and drugs. German law enforcement managed to confiscate the servers after years of investigation. A few weeks earlier, another black market, known as WordMarket, also closed down. The administrators flew off with the buyers’ money.
Increase in hacks
Conversely, hackers made more money by stealing cryptocurrencies than last year. $1.9 billion in currency was stolen in hacks between January and July 2021, compared to $1.2 billion over the same period in 2021.
Several hacks have also marked the ecosystem in recent weeks. These include the hacking of Nomad, a cryptocurrency bridge. By exploiting a flaw, attackers stole $190 million. Solana, one of the most important cryptocurrencies, was also the victim of an attack. 8000 investors were stripped in a few hours. Over $6 million went missing during the operation.
A barrier to adoption?
The fall of the ecosystem has also been accompanied bya decrease in the number of legal transactions. Legitimate transactions are down 36% year over year. The decline is more marked than for criminal transactions.
While Bitcoin flounders around $20,000, a host of new investors have suddenly turned away from the market. Clearly, a plethora of individuals, attracted by the lure of profit in 2021, left the sector in 2022. In particular, they may have stopped injecting funds into their Binance, Coinbase or Crypto.com account.
Inflation and the rise in raw materials could also have reduces investment capacity of the less fortunate. As the price of gas, wood and electricity spikes, it’s harder to set aside to buy assets. Also, more seasoned investors tend to shy away from risky investments, such as cryptocurrencies, during phases of uncertainty. A study by the Boston Consulting Group (BCG) nevertheless expects that the adoption of cryptocurrencies continues to progress. Experts rely on one billion cryptocurrency users in 2030.
Moreover, despite this blood red market, cryptocurrencies continue to attract institutional investors. For example, many US pension funds continue to show interest in crypto-assets, reports the wall street journal. Aware of the risks of this type of investment, they consider the fall in the market as an opportunity.