The crypto market has experienced its fair share of highs and lows over the past few years. From an all-time high in 2017 to the devastating Terra collapse in 2022, traders have had to contend with a volatile and unpredictable market.
This volatility has led to an increase in malicious actors looking to capitalize on these uncertain times. Interestingly, Scammers adapted their strategies to fit into the changing environment due to the Terra collapse and the resulting bear market.
According to a Chainalysis report, scammers shifted away from large-scale Ponzi schemes, ICO fraud, and pump-and-dump strategies. Instead, they rely on subtle tactics such as free giveaways and romance scams.
Crypto Fraudsters Adapt to Bear Market
As crypto traders exercised caution when investing during the Terra collapse of 2022, fraudsters shifted their tactics to concentrate on using free giveaways and romance scams to perpetrate their crimes. Data shows a reduction in revenue for these scammers due to the bear market.
However, some have managed to be successful by altering their approaches. Eric Jardine, the cybercrimes research lead at blockchain analysis firm Chainalysis, discussed the impact of market circumstances on crime during a recent webinar where she discussed consumer-targeted fraud.
Jardine outlined how criminals can adjust their strategies to make the most of different market conditions. Jardine suggested that although the crypto-fraud proceeds decreased in 2022, the various scams did not follow the same trajectory.
He further commented, “In the report, we classified the scams into types, and it became apparent the bear market had differing effects on each scam type.” The Terra collapse in 2022 caused crypto investors to distrust investing.
Thus, scammers started utilizing alternative approaches, like taking advantage of greed via free giveaway swindles and exploiting people’s emotions through romantic scams. According to Jardine, these fraudsters are likely switching tactics to ones that target different emotional responses as investment scams become less lucrative, given the market conditions.
Tactical Adaptation And Alteration
Using data evidence, Jardine demonstrated that as soon as investment scams became less profitable, romance and giveaway scams became more prevalent. This indicated that scammers could adapt and alter their tactics depending on the current market conditions rather than relying on the same approach.
The cybercrime specialist pointed out that in 2022, a multi-level marketing scam took a substantial portion of the $5.9 billion lost to scams, apart from the romance and giveaway frauds. Jardine illustrated that among the leading scams that year, the hyperverse scam accounted for around $1.3 billion, about 22% of the total fraud amount.
The Chainalysis cybercrimes research lead advised investors to take their time to research any potential investments and to verify the identity of anyone they are speaking with to avoid becoming a scam victim.
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