Halfway Into The Year, Crypto Scams Have Taken A Major Hit Compared To The Highs Of 2021 – Here’s Why

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Halfway Into The Year, Crypto Scams Have Taken A Major Hit Compared To The Highs Of 2021 - Here's Why
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  • Cryptocurrency crime activity has dipped like the rest of the markets since the start of the year.
  • Several reasons can be identified for the drop, including the general crypto winter and the absence of newbies in the space.
  • While crypto scams are in general decline, hackers have netted staggering sums over the last quarter.

The entire crypto landscape is finding its feet after a turbulent quarter that wiped over $1 trillion in market capitalization. Still, the dark clouds have offered the industry an unlikely silver lining. Illicit crypto activity is at an all-time low for the industry, with the key players hoping the trend will continue.

Falling crypto crime activity

Chainalysis, a blockchain analytics firm, released a report covering the statistics around cryptocurrency crime after six months of 2022. The mid-year report noted that illicit activity like hacks and scams was in general decline across the board.

The report noted that total scam revenue for the year stood at $1.6 billion – 65% lower than July 2021.  A large number of the successful scams were the product of outlier scams like JuicyFields.io and OmegaPro.world. Both schemes were responsible for over a third of all crypto scams after the first six months of 2022, with JuicyFields.io netting over $270 million.

While scams reached an all-time high, researchers also note a darknet market trend. A key feature of darknet marketplaces is their use of crypto. In recent months, digital asset usage on the platform has hit rock bottom, with experts saying that it signals the capability of law enforcement agents in the space.

The crypto winter is responsible

Chainalysis report suggests that the decline in crypto crime activity is mainly due to the falling prices of digital assets. As BTC fell, a pattern of falling crime activity emerged as enormous returns “became less enticing to potential victims” while inexperienced users typically susceptible to scams stayed out of the chaotic markets amid the chilling winter.

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For the inactivity in darknet marketplaces, some experts have pointed to the shutting down of Hydra, a leading player in the space, as a critical reason for the falling figures.

“Nevertheless, the decline in darknet market revenue – and indeed, cryptocurrency value received by all criminal categories – following Hydra’s shutdown shows the tangible impact of law enforcement’s growing ability to fight crime,” read the report.

Not a bed of roses

The report highlighted that stolen funds from hacks are the only area of digital asset crime bucking the trend of falling metrics. A staggering $1.9 billion worth of assets has been pilfered from the wallets of unsuspecting users compared to the $1.2 billion stolen in 2021 within the same time frame.

Cryptocurrency users were stunned by the news of a $190 million hack of Nomad and the security breach of Slope that caused Solana users steep losses. Decentralized finance (DeFi) protocols bore the brunt of hacker activity, while law enforcement agencies have narrowed the bad actors to operate mainly out of North Korea.