Chainalysis, a leading blockchain analysis company, released its Crypto Scam Revenue 2024 report, which anticipates a significant increase in cryptocurrency scam revenue by 2025.
The company's analysis suggests that the growing sophistication of the fraud industry, particularly through the use of generative artificial intelligence (AI) and professional services supporting scams, will drive this growth.
According to the report, revenue from crypto scams totaled approximately 9.9 billion USD in 2024, with 'pig butchering' scams - a type of fraud involving false romantic intentions to lure victims into investment traps - leading the ranking. Chainalysis projects that this number will exceed 12 billion USD as the company continues to identify more addresses linked to fraudulent activities.
Elad Fouks, director of anti-fraud products at Chainalysis, highlighted the role of generative AI in making scams more scalable and accessible, allowing fraudsters to create synthetic identities and bypass identity verification controls. He stated that 85% of scams involve fully verified accounts, a situation exacerbated by AI's ability to generate realistic fake content, such as websites and advertisements.
The report also highlighted the increasing sophistication of crypto frauds and scams, referencing operations like Huione Guarantee, a peer-to-peer marketplace that offers legitimate and illicit services supporting fraudulent operations. Chainalysis noted an impressive 1,900% growth in revenue from AI service providers in the scam sector, indicating a significant increase in the use of AI technology to commit fraud.
The Federal Bureau of Investigation had already warned in December about the use of generative AI by scammers targeting cryptocurrency investments. Additionally, Deloitte's Center for Financial Services estimated that generative AI and deepfakes could cost the US economy 40 billion USD by 2027.
Chainalysis's report also mentioned that its annual estimates of fraudulent activities have averaged a growth of 24% since 2020. While total illicit crypto volumes for 2024 may have reached up to 51 billion USD, the share of illicit crypto use compared to the entire market has supposedly fallen to the lowest level in three years.
The analysis company expects total losses from scams, particularly those driven by AI, to be even more substantial once all factors are considered.
