In just a matter of months the cryptocurrency market has been shattered. The depeg of TerraUSD last year coupled with several high profile bankruptcies, the most prominent among them being FTX, BlockFi, and Celsius, have proven just how volatile the digital asset realm truly is. As of the time of writing, Bitcoin sits at $24,888 while Etherum is priced at $1,711, both of which are seeing a 40+ percent rise year to date.
While these two aforementioned coins might be among the most well known assets within the crypto industry, more than most of their rivals prove to be utter scams. Such stories represented in the likes of FTX and Three Arrows Capital should prove illuminating, as data collated by Chainalysis shows nearly one in every four new coins printed are a scam. The data and analysis firm recently released its Crypto Crime report in tandem with a blog post showing how 2022 financial criminals fared in the tokenized ecosystem.
Given these conditions, what with prices dropping dramatically over the course of the year, scam performance somewhat diminished, but the analysts at Chainalysis add that "some crypto scam types are growing despite the ongoing bear market." Out of the ten scams the report highlights, the most dramatic of all was Hyperverse, which netted a whopping $1.3 billion.
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The data also notes that romance scams were "the most destructive on a revenue-per-victim basis," equating to over $15,000 in average victim deposit size. These romance scams can typically fall into the same category as so-called "pig butchering," which involves winning a person's trust with gains before luring them into more seedy and otherwise malicious crypto investments.
Interestingly, despite their high profile nature in 2022, NFTs proved to be at the bottom of the list in terms of average deposit size, sitting at about $462 per scam. More than not it can be quite easy to tell when an NFT project is a scam or could inevitably evolve into one, as more recently witnessed in Logan Paul's CryptoZoo debacle. In Chainalysis' report, NFT scams were also far more popular in North America and Australia, due in large part to that aforementioned popularity.
Chainalysis also highlights that over half of all funds sent using a crypto ATM were sent to scammers, averaging around $35.3 million. This number could be greatly reduced, according to the analysts, if crypto ATMs educated users more on the viability of scams, how to avoid them, and alert customers of potential addresses associated with previous scams.
When peering at the daily scam revenue chart, the report also interestingly highlights how TerraLuna's collapse led to a swift decline in average daily crypto scam revenue. The numbers slowly fluctuate and rebounded a bit in May, but no sooner hit an ever-decreasing windstorm which has seemingly only worsened, for the better.
Regulation is only just starting to fully kick in and the hammer is slowly but surely bound to set. The industry is feeling this pressure, evidenced by the likes of recent events, what with banks cutting themselves out of the picture. Although the banks leaving the crypto industry might be somewhat smaller, lesser known institutions, like Signature Bank, New York Metropolitan Commercial Bank, and even Citigroup, the cold truth is that crypto has lost its charm.
