Crypto Scams on Rise Again, Here's What You Need to Know

2024 is one of worst years so far

The more bullish the market gets, the more unqualified traders will rush in on every possible asset available.

According to the latest report by Chainalysis, crypto heists have surged significantly in 2024, with stolen funds nearly doubling from $857M to $1.58B by the end of July. Ransomware inflows have also increased, with $459.8M funneled through the first half of 2024 compared to $449.1M during the same period in 2023, pointing to another potential record year for ransomware.

Source: Chainalysis

After a sharp decline in 2023, hacking activity has rebounded this year. By the end of July, the cumulative value stolen in 2024 had already risen by 84.4% compared to last year. While the number of hacking incidents has only marginally increased by 2.76% YoY, the average amount stolen per event has shot up by 79.46%, climbing from $5.9M per incident in early 2023 to $10.6M per event in 2024.

Centralized services have become prime targets for hackers, accounting for a large share of the losses. BTC transaction volume associated with stolen funds represents 40% of these flows in 2024, largely driven by high-value hacks like the $305M theft from the centralized exchange DMM, which alone represents 19% of this year’s stolen value.

In 2024, ransomware payments have reached new heights, with the largest recorded payment to date being approximately $75M to the ransomware group Dark Angels. This is a 96% increase from the maximum payment in 2023 and a staggering 335% increase compared to 2022.

Source: Chainalysis

AI scams

The FBI has recently warned about the growing threat of AI-based scams. According to the agency, cybercriminals are leveraging publicly available and custom-made AI tools to orchestrate highly targeted phishing campaigns, exploiting the trust of individuals and organizations alike.

These AI-driven phishing attacks are characterized by their ability to craft convincing messages tailored to specific recipients and containing proper grammar and spelling, increasing the likelihood of successful deception and data theft.

AI-powered chatbots and virtual assistants can promote fake tokens, coordinate pump-and-dump schemes, or provide misleading investment advice. Last year saw a growing number of deepfake video ads, and the trend continues into 2024.

Source: NYT

Fraudsters often exploit high-profile figures' images and AI-generated videos to endorse fraudulent crypto projects, utilizing deepfake technology. Deceptive deepfake videos lure viewers with promises of doubling cryptocurrency investments through QR codes.

Compromising YouTube access tokens, attackers quickly transform channels to impersonate entities, redirecting to malicious sites promoting crypto-doubling scams.

Recent Delloiette report shows that there is already an entire cottage industry on the dark web that sells scamming software from $20 to thousands of dollars. This democratization of nefarious software is making a number of current anti-fraud tools less effective.

Source: Delloiette

Basic tips to avoid scams

1. Do not trust big profit promises

Cryptocurrency investments inherently carry risks, and scams often prey on the desire for quick profits. Scammers entice victims with promises of unrealistically high returns, doubling investments, or free money. Always approach such claims with skepticism and conduct thorough research before considering any investment.

2. Check for errors in emails and messages

Scammers often use communication channels with misspellings, grammatical errors, or inconsistencies. Real entities maintain a professional and error-free communication style.

3. Avoid transactions with unclear details

Legitimate investment opportunities provide clear and transparent information about how funds will be used and the expected returns. Scams, on the other hand, often lack clarity and specifics.

4. Look for manipulation tactics

Scammers may use coercive tactics like extortion or present seemingly binding contracts to trap individuals. Always scrutinize any contractual obligations, and be wary of threats or manipulation attempts. This also applies to private texting with someone you don’t know.

5. Question celebrity endorsements

If an endorsement seems out of place or unusual, take the time to verify its authenticity. Real endorsements are typically well-documented and consistent, as influencers are generally cautious about the projects they associate with.