Crypto Scams Surge in 2024, Powered by AI: Chainalysis Warns

In 2024, cryptocurrency scams are expected to reach record levels, driven by the increasing use of artificial intelligence (AI) by cybercriminals, according to a report by blockchain analytics firm Chainalysis. The report warns that the growing sophistication and professionalization of the scam ecosystem pose significant risks to investors and the broader crypto community.



The report estimates that crypto wallets linked to scams received $9.9 billion in cryptocurrency in 2024, with the figure likely to grow as more scam wallets are identified. This represents a 29% drop from the record $14 billion stolen in 2021, but experts caution that the final number could exceed $12 billion as more fraudulent transactions come to light.

One of the most alarming trends of the year is the sharp rise in "pig butchering" scams, which grew by almost 40% year-over-year and accounted for over 33% of total scam revenue. These scams, which involve fraudsters building fake relationships with victims to defraud them over time, have become more widespread and geographically dispersed. Originally concentrated in large scam compounds in Southeast Asia, these operations have now expanded to other regions, including Nigeria and Namibia.



Meanwhile, high-yield investment scams (HYIS) accounted for over 50% of total crypto scam revenue, but HYIS inflows declined by almost 37% year-over-year. One notable example is Smart Business Corp, a Ponzi scheme targeting Spanish-speaking investors, which amassed approximately $1.5 billion in cryptocurrency transactions despite repeated regulatory warnings.

Crypto ATMs have also become a favored tool for scammers, particularly in targeting elderly individuals. In the first half of 2024 alone, losses from crypto ATM-related scams in the US surpassed $65 million, with an average individual loss of $10,000.



Chainalysis also warned that platforms like Huione Guarantee, a peer-to-peer (P2P) marketplace associated with a Cambodian conglomerate, are making AI technology accessible to bad actors. Huione Guarantee has become a hub for illicit services that support pig butchering scamming operations and serve as a one-stop-shop for scammers' needs. The platform has processed over $70 billion in crypto transactions since 2021, with approximately $375.9 million linked directly to vendors providing scam-enabling technology.

"Platforms like Huione Guarantee enable the sophistication and professionalization of the scam ecosystem, and highlight the persistent and adaptive nature of these illicit activities," Chainalysis added.

The report continued that over $12 billion was lost to crypto scams in 2024, but the analytics platform expects this to spike over the coming year. Taking into consideration an average annual increase of 24% in scam revenue between reporting periods, Chainalysis predicts that total scam losses could surpass $15 billion in 2025.

As the crypto industry continues to grow and evolve, so too do the threats posed by scammers and cybercriminals. Investors and regulators must remain vigilant and adapt to the changing landscape to protect themselves and the broader crypto community from the ever-increasing sophistication of crypto scams.