Cryptocurrency related scams have taken a total of $381 million from victims so far this year. This figure makes crypto scams the largest category of cryptocurrency-related crimes so far in 2020.
Chainalysis data still shows current figures are well below those seen in 2019. In 2019, scams accounted for 74% of crypto-related crimes.
The current 2020 drop in value of crypto scams is attributed to the absence of a major scam like the Plustoken Ponzi scheme.
Crucially, Chainaylsis’ data also shows that the share of cryptocurrency-related crimes to overall crypto activity remains well below 1%.Still, the blockchain analytics firm cautions that current figures are only preliminary. The final figure might grow as more previously unreported scams are uncovered.
Meanwhile, in its comments on the 15 July Twitter hack, Chainalysis notes that the “scam perpetrated by the hackers isn’t new either.”
The impersonation of a notable person or company on social media and the imploring of users to send them cryptocurrency in return for more later has been going on for years.
Pointing to data compiled by Cryptoscamdb—an open-source database—Chainalysis shows that this type of scam (or trust trading as it is called) accounts for about 71% of all crypto scams reported since June 2018.
Chainalysis also reveals that Twitter hackers “took in 13.14 BTC worth approximately $120,000 over the course of the afternoon.”
The analytics firm has identified three main addresses used by scammers but it notes “most of the stolen funds were (subsequently) consolidated in the bitcoin wallet address” which it terms the scam cash-out address.
Of the approximately 21 BTC deposited to the scam cash-out address over the lifetime of that wallet, “as of 4:30 PM ET July 22, 2020, roughly 9 BTC is sitting in 23 wallets, 8 BTC has been sent to mixing services like Wasabi Wallet, and 4 BTC has been sent to other entities.”
Nevertheless, Chainalysis refuses to divulge more details fearing this might jeopardize ongoing investigations.
Meanwhile, a whale alert post on Twitter 23 July reports “a payment of 1.8526 BTC (17589 USD) was made to a confirmed fake giveaway scam!”
In the same blog post, Chainalysis also asserts the importance of blockchain analysis. It argues that the visibility into fund movement enabled by cryptocurrencies like bitcoin makes them a safer, more transparent asset than cash and other traditional forms of value transfer.
Can law enforcement agencies catch crypto criminals using blockchain analysis tools? Tell us what you think in the comments section below.
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