A recent report from Chainalysis reveals the increasing sophistication and profitability of cryptocurrency scams in 2024. According to the 2024 Crypto Crime Mid-year Update Part 2, scammers have shifted from long-term schemes to more targeted and shorter campaigns, with “pig butchering” scams standing out as a prime example.
Chainalysis, a blockchain analysis firm based in New York, highlighted that these crypto scams are generating billions of dollars in inflows this year. The report emphasizes the growing complexity of the tools and tactics employed by scammers, both on-chain and off-chain.
On-chain tools refer to the cryptocurrency wallets and addresses used to receive payments from victims, while off-chain tools involve domains and social media accounts that scammers manipulate to lure targets.
One of the key trends in 2024 is the surge in scam inflows to newly activated wallets. Chainalysis observed that 43% of scam-related funds this year have gone to wallets that were activated in 2024, a significant increase compared to previous years. In 2022, only 29.9% of scam-related funds went to wallets activated that year. This rise suggests that scammers are becoming more agile in creating new wallets to avoid detection.
Ponzi schemes
Another trend is the decrease in the lifespan of these scams. Between 2020 and 2024, the average duration of scam operations has dropped from 271 days to just 42 days. This shift is attributed to the increasing enforcement efforts and the actions of stablecoin issuers, who are blacklisting scam addresses more often. As a result, scammers are moving away from elaborate Ponzi schemes that target a broad audience, instead opting for more targeted campaigns like pig butchering and address poisoning.
Despite the trend toward using new wallets, the majority of scam-related funds (57%) still flow into wallets that were activated before 2024. Among these, one of the largest wallets is linked to Myanmar’s notorious KK Park, a hub for pig butchering scams. This wallet, first observed in 2022, continues to be a major player in the scam landscape, accumulating over $100 million in 2024 alone. These funds likely come from a mix of scam victims and ransom payments from families trying to save their trafficked relatives.
Purchase of social media profiles
The operations at KK Park are particularly concerning due to their adaptability. Scammers frequently purchase established social media profiles from services based in China, using these profiles to enhance their credibility and lure more victims. Chainalysis reports that from 2022 to 2024, scammers have sent approximately $10.5 million to services that provide these illicit tools. The pricing for social media profiles ranges from $5 to $20 per account, indicating that scammers may have acquired between 525,000 and 2.1 million profiles for their campaigns.
Once scammers have accumulated their illicit gains, they often turn to centralized exchanges to launder the funds and convert them into fiat currency. This process of off-ramping remains a crucial part of their operations, allowing them to profit from their activities with relative anonymity.