How Scammers Evolve During Crypto Bear Market
Explore the adaptability of crypto scammers during the 2022 bear market, their evolving tactics, and the future challenges facing the crypto industry in combating scams.
The bear market in 2022 saw a significant drop in crypto scam revenue, but scammers proved their resilience by adjusting their tactics. As overall scam revenue declined by 46%, certain types of scams managed to persist and even thrive. This article explores how scammers adapted during the bear market and which scams became more prevalent in 2022.
Adapting to Market Conditions
Eric Jardine, the cybercrimes research lead at blockchain analysis firm Chainalysis, explained in a crypto crime webinar that scammers shifted their strategies as market situations changed. He highlighted that not all scams behaved the same way in the context of the bear market.
The Terra collapse in 2022 made crypto investors skeptical of investing, leading scammers to shift their focus to other strategies that played on different emotions.
Chainalysis data revealed that as investment scams became less effective, romance and giveaway scams saw an increase in prevalence. These scams do not show a positive correlation with Bitcoin's price, indicating that they can persist even when the market is down.
Scammers targeted victims' compassion through romance scams and their greed through giveaway scams, showing their ability to adapt to market conditions.
Although romance scams had lower overall revenue as a category, they recorded the highest average victim deposit size in 2022, with the average victim losing just under $16,000. Chainalysis attributed the persistence of romance scams to their emotional appeal, which remains effective regardless of market trends.
Victims of these scams are not driven by the desire to get rich quickly but to help someone they believe to be a potential romantic partner.
Giveaway scams, like romance scams, managed to stay relatively immune to the price falls in the crypto market. They persisted because they preyed on victims' greed for free rewards, offering the promise of substantial returns with minimal effort.
Scammers constantly adjusted their tactics to target victims' emotions and exploit their vulnerabilities.
Hyperverse Scam and Other Scam Types
Apart from romance and giveaway scams, multilevel marketing scams also had a significant impact on the total scam revenue in 2022. The hyperverse scam alone accounted for approximately $1.3 billion or 22% of the total scam revenue during the year.
Other scam types, such as NFT scams and "pig-butchering" scams, also persisted, with the latter being linked to half of all crypto companies involved with scams in the United Kingdom.
The Future Challenges for Crypto
The adaptability of crypto scammers during the bear market of 2022 raises pressing questions and sparks polemics about the future of crypto scams in general. As the market evolves and scammers become more sophisticated, it is essential to ask whether existing regulations and security measures are adequate to combat these evolving threats.
Furthermore, how can the crypto community effectively respond to the ever-changing tactics of scammers?
The persistence of scams like romance and giveaway scams, despite a decline in overall scam revenue, suggests that scammers will continue to exploit human emotions and vulnerabilities.
As the crypto ecosystem grows and attracts new users, the potential for scams to target a wider audience increases, making it even more critical to address these issues proactively.
One might argue that the responsibility of curbing scams should not fall solely on individual users. Instead, there is a need for a collaborative effort between regulatory bodies, blockchain analysis firms, and crypto platforms to develop more robust security measures and enforce stricter regulations to deter scammers from operating in the space.
The crypto community must engage in open discussions about the ethical implications of scams, particularly as they impact new and unsuspecting users. Can the industry continue to thrive and gain mainstream adoption if it does not address the risks posed by scams?
The future of the crypto market depends on the collective ability to confront these challenges and develop strategies that protect both new and experienced users alike.
The adaptability of crypto scammers during the bear market highlights the need for ongoing vigilance, collaboration, and discussions about the future of scams in the crypto space.
Addressing these concerns is crucial for the growth and sustainability of the industry, and the broader acceptance of cryptocurrencies as a legitimate financial asset.