While cryptocurrency prices drop, the crypto scam industry is also feeling the chill. However, according to a recent report by Chainalysis, some scammers are adapting their strategies and continuing to thrive despite the bear market.
In a recent crypto crime webinar, Eric Jardine, the cybercrimes research lead at Chainalysis, revealed how scammers shift their tactics in response to market conditions.
Not all scammers behave similarly
The Chainalysis report shows that while the overall revenue from crypto scams dropped by 46% in 2022, not all scams behaved similarly. Jardine noted that one of the new innovations in the report was sub-classing scams into types, revealing that some scams behaved differently in the context of the bear market.
For instance, after the Terra collapse in 2022, which made crypto investors skeptical of investing, scammers turned to other tactics such as preying on greed with free giveaway scams and playing with people’s hearts through romantic scams.
Jardine emphasized that market conditions make investment scams unlikely to be profitable, leading scammers to substitute their tactics towards other scams that play on different emotional senses.
The report presented data that showed as soon as investment scams became less effective, romance and giveaway scams rose, indicating that scammers can change their tactics depending on the market situation.
Multi-level marketing scams take a massive chunk out of the lost revenue
Apart from romance and giveaway scams, Jardine highlighted that multilevel marketing scams took a massive chunk out of the $5.9 billion lost to scams in 2022. The hyperverse scam accounted for approximately $1.3 billion, roughly 22% of the scam revenue in that year.
The hyperverse scam is a typical example of how scammers are adapting their tactics to market conditions. It works by offering people the chance to invest in a virtual world, promising huge returns on their investments. However, the virtual world is a scam, and investors end up losing all their money.
According to Jardine, in a bear market, people are more vulnerable to scams that promise high returns, making the hyperverse scam more effective.
The report also revealed that crypto scam revenue throughout the year tracks almost perfectly with Bitcoin’s price, consistently maintaining a three-week lag between price moves and changes in revenue. Nevertheless, not all scams follow this pattern, as some types of scams see revenue increase as crypto asset prices decrease.
As cryptocurrency prices continue to drop, scammers are adapting their tactics to stay ahead. Chainalysis’ report shows that romance and giveaway scams are becoming more prevalent as investment scams become less effective.
Additionally, the hyperverse scam is an example of how scammers are taking advantage of market conditions to lure investors into fake investments.
It’s crucial that consumers remain vigilant and take precautions when investing in cryptocurrencies to avoid falling victim to these scams.
What this shows is that scammers are continually changing their tactics to suit market conditions, and it’s essential to keep this in mind when investing in cryptocurrencies.
While it may be challenging to keep up with the ever-changing scams, staying informed and exercising caution can help individuals avoid falling prey to scammers.
