Romance Scams Drive Illicit Crypto Activity, Says Chainalysis
According to blockchain investigators at Chainalysis, romance scams were a significant driver of illicit crypto activity in the past year. The company’s 2024 Crypto Crime Report reveals that “pig butchering scams,” a type of romance scam, nearly doubled their revenue in 2023 compared to the previous year and have increased by 85 times since 2020.
The Scale of Crypto Romance Scams
Despite an overall decline in total value sent to scams, which includes giveaway scams, impersonation scams, and investment scams, romance scams have continued to thrive. Chainalysis notes that romance scams have the most devastating impact on victims compared to other scam types, based on the average payment size.
Chainalysis data shows that the average payment size for romance scams is $4,593. Since victims often make multiple payments to the same scam address, the average losses per victim tend to be much larger than this figure. In comparison, giveaway scams, impersonation scams, and investment scams have average payments of $1,113, $948, and $413 respectively. NFT scams follow closely behind with an average size of $3,095.
It’s worth noting that some generic investment scams may also employ romance scam tactics.
In 2023 alone, crypto scams amassed a total of $4.6 billion compared to $6.5 billion in 2022 and $10.8 billion in 2021.
Crypto and Terrorism
The Chainalysis report also highlights how terrorist organizations are taking advantage of crypto transactions. It states that money services businesses are playing a crucial role in facilitating illicit crypto transactions for groups like Hezbollah.
However, calculating terror financing totals based on the flow of funds through these services can lead to significant overestimations, as legal transactions may be mixed in. Chainalysis suggests that government agencies with access to off-chain intelligence are better equipped to detect these activities and can leverage blockchain analysis tools to further investigate financial flows.
Hot Take: Crypto Bros Fall for Romance Scams at an Alarming Rate
Romance scams have emerged as a major concern within the crypto community. Despite an overall decline in scam activity, romance scams have seen a surge in revenue, highlighting the vulnerability of individuals within the industry. The average payment size for romance scams is significantly higher than other scam types, leading to substantial losses for victims. Moreover, terrorist organizations are exploiting crypto transactions, with money services businesses serving as facilitators. It is crucial for individuals and government agencies to remain vigilant and utilize blockchain analysis tools to combat illicit activities in the crypto space.
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