According to blockchain analytics company Chainalysis, the emergence of “pig butchering” frauds and the growing use of generative artificial intelligence probably caused cryptocurrency scam profits to reach a record high in 2024.
According to a research released Thursday, the company calculated that revenue from pig butchering scams, in which scammers build connections with people and persuade them to take part in fraudulent schemes, rose by about 40% in 2024 compared to the previous year.
Crypto frauds generated at least $9.9 billion (about Rs. 85,996 crore) in revenue in 2024, but more data might push the total to a record high of $12.4 billion (about Rs. 1,07,711 crore), the report added.
According to Chainalysis analysts, “Crypto fraud and scams have continued to increase in sophistication,”
The company cited the usage of GenAI and marketplaces that facilitate pig slaughtering operations as elements that make it simpler and less expensive for fraudsters to grow their businesses.
In fact, according to Chainalysis, GenAI technology has the ability to “exponentially scale crypto scams”.
Crypto fraud activity has increased by 24 percent year on average since 2020, according to the business, which uses publicly available transaction data on the blockchain to detect scam money.
As interest in blockchain technology increased and investors sought out large returns, the price and popularity of cryptocurrencies skyrocketed in recent years.
Since US President Donald Trump won the election in November, the industry has grown dramatically in anticipation of a more relaxed regulatory environment.
According to Chainalysis, high-yield investment scams that promised astronomical returns and crypto drainers—where con artists impersonate blockchain projects and take over victims’ cryptocurrency wallets—were two other especially profitable scams.
Following the hacking of the US Securities and Exchange Commission’s X account, a cryptocurrency drainer impersonated the agency in January 2024.
According to Chainalysis, cryptocurrency ATMs have also been major destinations for frauds. To trick victims into depositing money into the machines, scammers frequently pose as customer service representatives or government representatives.
The Rise of AI-Driven Cryptocurrency Scams in 2024
In 2024, cryptocurrency scams reached unprecedented levels, driven by the increasing use of artificial intelligence (AI) and sophisticated scamming techniques. According to a report by blockchain analytics firm Chainalysis, the total revenue from crypto scams hit a record high of $9.9 billion, with the potential to rise to $12.4 billion as more data becomes available.
Key Factors Contributing to the Surge in Scams
- Pig Butchering Scams: This type of scam involves criminals building relationships with victims through social media or dating apps, only to convince them to invest in fraudulent schemes. In 2024, revenue from pig butchering scams grew nearly 40% year-over-year, with the number of crypto wallet deposits from these scams increasing by 210% Scams Surged in 2024, Driven by AI, Says New Report](https://markets.businessinsider.com/news/stocks/bitcoin-btc-scams-surged-in-2024-driven-by-ai-says-new-report-1034370176).
- Generative AI: Scammers are leveraging generative AI to create realistic fake identities and content, making their scams more convincing and harder to detect. This technology has allowed criminals to impersonate real people and generate fake investment opportunities, leading to a 1,900% increase in AI-related crypto fraud Scams Surged in 2024, Driven by AI, Says New Report](https://markets.businessinsider.com/news/stocks/bitcoin-btc-scams-surged-in-2024-driven-by-ai-says-new-report-1034370176).
- Crypto Drainers: These scams involve perpetrators posing as blockchain projects and taking control of victims’ crypto wallets. In January 2024, a crypto drainer even posed as the U.S. Securities and Exchange Commission after compromising the regulator’s X account.
- High-Yield Investment Scams: Scammers promise outsized returns on investments, luring victims into depositing their cryptocurrency into fraudulent schemes. These scams have become more sophisticated and widespread, contributing significantly to the overall increase in crypto fraud.
The Role of AI in Amplifying Scams
AI technology has made it easier and cheaper for scammers to scale their operations. By creating synthetic identities and realistic content, AI allows fraudsters to bypass traditional identity verification controls and target a larger pool of victims. This has led to a significant rise in the sophistication and reach of crypto scams.
The Impact on Victims and the Need for Action
The financial losses from crypto scams have been devastating for many victims, with billions of dollars being stolen through these fraudulent schemes Scams Surged in 2024, Driven by AI, Says New Report](https://markets.businessinsider.com/news/stocks/bitcoin-btc-scams-surged-in-2024-driven-by-ai-says-new-report-1034370176). To combat this growing threat, Chainalysis emphasizes the need for sustained efforts from law enforcement, regulators, and individuals to tackle the increasing sophistication of crypto fraud Scams Surged in 2024, Driven by AI, Says New Report](https://markets.businessinsider.com/news/stocks/bitcoin-btc-scams-surged-in-2024-driven-by-ai-says-new-report-1034370176).
In conclusion, the rise of AI-driven cryptocurrency scams in 2024 highlights the urgent need for enhanced security measures and greater awareness among potential victims. As scammers continue to leverage advanced technologies, it is crucial for all stakeholders to work together to protect the integrity of the cryptocurrency ecosystem and safeguard users from financial harm.
