Blockchain Analytics Firm Chainalysis Reports $12.4 Billion in Illicit Crypto Gains
The rise of crypto scams reached an all-time high in 2024, driven largely by the increasing sophistication of “pig butchering” scams and the widespread adoption of generative artificial intelligence (GenAI), according to a report by blockchain analytics firm Chainalysis.
The firm estimated that revenue from crypto scams surged to at least $9.9 billion in 2024, with projections suggesting that the final figure could exceed $12.4 billion once all data is accounted for. This marks a significant increase from 2023, reflecting the rapid evolution of fraudulent schemes within the crypto industry.
Let’s take a closer look at how these scams work, the role of AI in crypto fraud, and what investors can do to protect themselves.
What Is “Pig Butchering”? The Scam That’s Sweeping the Crypto World
One of the biggest drivers of the increase in crypto fraud is the rise of “pig butchering” scams. Named after the practice of fattening up pigs before slaughter, these scams involve long-term deception where fraudsters build relationships with victims over weeks or months before convincing them to invest in fake schemes.
How Pig Butchering Scams Work:
✔ Scammers create fake online personas and establish trust through social media, dating apps, or professional networking sites.
✔ They encourage victims to invest in fraudulent crypto projects, promising massive returns.
✔ Victims initially see small profits, making them more likely to invest larger amounts.
✔ Once a significant sum is deposited, scammers disappear, leaving victims unable to recover their funds.
According to Chainalysis, revenue from pig butchering scams increased by nearly 40% in 2024, highlighting their growing impact on investors worldwide.
The Role of Artificial Intelligence in Crypto Scams
The increasing use of generative AI has made crypto scams more sophisticated, scalable, and difficult to detect. Chainalysis warns that AI-driven scams could exponentially increase fraudulent activity in the crypto space.
How AI Is Powering Crypto Fraud:
🚀 AI-generated deepfake videos and voice cloning help scammers impersonate trusted figures.
🚀 Automated phishing campaigns target thousands of victims simultaneously.
🚀 AI chatbots engage victims in convincing conversations, making scams more believable.
🚀 AI-driven hacking tools increase the success rate of cyberattacks on crypto platforms.
This new level of sophistication has made it easier and cheaper for scammers to expand their operations, contributing to the record-breaking fraud levels seen in 2024.
Other Major Crypto Scams in 2024
While pig butchering scams have dominated headlines, Chainalysis identified several other major fraud types that contributed to the $12.4 billion in illicit crypto gains this year.
1. Crypto Drainers
✔ Scammers pose as legitimate blockchain projects and gain access to victims’ crypto wallets.
✔ Victims unknowingly approve fraudulent smart contracts, allowing scammers to steal funds.
✔ Notable Case: In January 2024, a hacker impersonated the U.S. Securities and Exchange Commission (SEC) after compromising the agency’s X (formerly Twitter) account.
2. High-Yield Investment Scams
✔ Fraudulent platforms promise unrealistic returns on crypto investments.
✔ Scammers use Ponzi-style models, paying early investors with new victims’ money.
✔ Many scams collapse suddenly, leaving investors with significant losses.
3. Cryptocurrency ATM Scams
✔ Scammers impersonate government officials or customer support agents.
✔ Victims are instructed to deposit cash into cryptocurrency ATMs, believing they are paying taxes, fees, or fines.
✔ Once deposited, the funds are converted into crypto and quickly laundered.
These tactics have made 2024 one of the worst years for crypto fraud, emphasizing the urgent need for investor awareness and regulatory intervention.
Why Are Crypto Scams Increasing?
Several factors have contributed to the sharp rise in crypto-related fraud this year:
📈 Surging Crypto Prices – Bitcoin and other cryptocurrencies have gained significant value, attracting both new investors and scammers.
📊 Lack of Regulation – Many countries still have limited oversight of crypto transactions, making it easier for fraudsters to operate.
🤖 Advancements in AI – Scammers are now leveraging AI-powered tools to create more convincing fraud schemes.
🌍 Global Economic Uncertainty – With inflation and recession fears rising, desperate investors are more vulnerable to “get-rich-quick” schemes.
How to Protect Yourself from Crypto Scams
While crypto fraud is on the rise, investors can take proactive steps to protect themselves from falling victim to scams.
1. Verify Before You Invest
✔ Always research projects, companies, and individuals before making any investment.
✔ Use trusted crypto platforms with strong security measures.
✔ Be skeptical of “guaranteed” returns—if it sounds too good to be true, it probably is.
2. Beware of Unsolicited Investment Offers
✔ Scammers often approach victims via social media, dating apps, or emails.
✔ If someone you don’t know offers you a “unique investment opportunity,” it’s likely a scam.
3. Double-Check URLs and Social Media Accounts
✔ Fake crypto platforms imitate legitimate companies.
✔ Always confirm website URLs and verify official social media accounts before engaging.
4. Use Hardware Wallets for Crypto Storage
✔ Avoid storing large amounts of cryptocurrency on exchange wallets.
✔ Use hardware wallets (cold storage) to keep your funds secure.
5. Stay Updated on Crypto Security Trends
✔ Follow trusted financial news sources to stay informed about emerging scams.
✔ Monitor reports from blockchain security firms like Chainalysis.
By staying vigilant, investors can avoid becoming victims of crypto fraud and help reduce the success of these increasingly sophisticated scams.
Conclusion: Crypto Fraud at a Crossroads
The record-breaking $12.4 billion in crypto scams reported in 2024 highlights both the potential and risks of the cryptocurrency market. While blockchain technology offers unprecedented financial opportunities, it also presents new challenges as scammers become more advanced.
As regulators tighten oversight and security measures improve, the battle against crypto fraud will continue. However, the role of AI-powered scams and deceptive tactics like pig butchering signals a critical turning point for the industry.
For investors, due diligence, skepticism, and security awareness remain the best defenses against crypto scams in 2024 and beyond.
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