Scams and fraud involving cryptocurrencies hit record levels in 2024, driven by the use of artificial intelligence (A.I.), according to a new report by blockchain research firm Chainalysis.
The report states that cryptocurrency wallets linked to scams received $9.9 billion U.S. last year, though it pegs the total value of all crypto fraud and thefts at $12.4 billion U.S.
Chainalysis said the amount generated from crypto scams worldwide has risen by an average of 24% per year since 2020.
According to the latest report, the most popular crypto scam continues to involve fraudulent romances commonly known as “pig butchering.”
Pig butchering is a type of investing scam in which a criminal builds relationships with victims via social media or dating apps, intending to con them out of money through a fake investment proposal or opportunity.
The term “pig butchering” refers to the idea that scammers must first “fatten up” the victims with flattery before “butchering” them or stealing their money.
In 2024, pig butchering revenue grew nearly 40% year-over-year, with the number of crypto wallet deposits from pig butchering scams growing nearly 210%, according to Chainalysis.
Beyond pig butchering, criminals are also turning to A.I. to help facilitate their scams.
In 2024, A.I. service providers perpetrating crypto fraud saw their revenue grow by 1,900% from a year earlier.
Chainalysis says there has been an explosion in the use of generative A.I. technology to facilitate crypto scams.
Criminals are employing A.I. to impersonate people or generate realistic content that fool victims into making phony investments.
Chainalysis says that A.I. is being used to amplify and scale crypto fraud and crimes, making them more realistic to victims and amplifying financial losses.
A.I. is also allowing criminals to create fake identities and even voices that allow fraudsters to impersonate real people and bypass identity verification systems on many websites.
The report concludes that tackling crypto scams at scale will require sustained efforts from government agencies, regulators, and individuals as the fraud becomes more sophisticated.
