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Chainalysis, a leading blockchain analytics firm, released its Crypto Scam Revenue 2024 report, which anticipates a significant rise in cryptocurrency scam revenue by 2025.
The firm’s analysis suggests that the increasing sophistication of the fraud industry, particularly through the use of generative artificial intelligence (AI) and professional scamming support services, will fuel this growth.
According to the report, crypto scam revenue amounted to approximately $9.9 billion in 2024, with "pig butchering" scams—a type of fraud involving fake romantic intentions to lure victims into investment traps—leading the way. Chainalysis projects that this number is likely to exceed $12 billion as the firm continues to identify more addresses linked to fraudulent activities.
Elad Fouks, the head of fraud products at Chainalysis, highlighted the role of generative AI in making scams more scalable and affordable, 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 listings.
The report also shed light on the growing sophistication of crypto fraud and scams, referencing operations like Huione Guarantee, a peer-to-peer marketplace that offers both legitimate and illicit services aiding scamming operations. Chainalysis noted a staggering 1,900% revenue growth for AI service vendors within the scamming sector, indicating a significant uptick in the use of AI technology to carry out scams.
The Federal Bureau of Investigation had previously warned about the use of generative AI by scammers targeting cryptocurrency investments in December. Additionally, Deloitte’s Center for Financial Services has estimated that generative AI and deepfakes could cost the US economy $40 billion by 2027.
Chainalysis’ report also mentioned that its annual estimates of scam activity have seen an average growth of 24% since 2020. While the total illicit crypto volumes for 2024 may have reached as high as $51 billion, the share of illicit crypto use compared to the entire market has reportedly dropped to the lowest level in three years.
The analytics firm expects that the total losses from scams, particularly those powered by AI, will be even more substantial after all factors are considered.
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