Crypto Crime Surges 67% in 2024, Phishing Attacks Dominate

Crypto crime has been on the rise, with various forms of fraud and theft becoming increasingly sophisticated and prevalent. The industry has seen a significant increase in wallet drainer attacks, with a 67% rise from 2023 to 2024. This trend has led to a loss of credibility for the web3 sector, as users must navigate complex security measures to protect their funds. The rise in crypto scams not only affects existing users but also erodes trust and slows broader adoption, making potential newcomers hesitant to engage with crypto due to concerns about phishing attacks, fake wallets, and impersonation schemes.

One of the most concerning trends is the increase in 'pig butchering' attacks, where scammers build personal relationships with victims before convincing them to invest in fraudulent crypto projects. Revenues from these attacks have increased by almost 40% year-over-year from 2023 to 2024. Additionally, there has been a rise in physical attacks on Bitcoiners, known as wrench attacks, with over 200 documented incidents, more than 30 of which occurred in the first half of 2025. These attacks are becoming increasingly sophisticated, leveraging AI-generated content, deepfakes, and advanced phishing tactics to bypass detection and deceive even the savviest of users.

Phishing and social engineering remain the most prolific types of crypto crime, accounting for 70-90% of all attacks. These attacks often take the form of fake emails, texts, and websites that trick users into giving up their private keys or wallet credentials. Best practices to protect against these attacks include visiting official channels, rigorously inspecting links, double-checking wallet addresses, and avoiding clicking on links or attachments in emails. AI-powered deepfake scams are also on the rise, with scammers using AI-generated videos and voices to impersonate trusted figures or company executives. Verified data, which can prove when content was generated and how, is being pioneered as a solution to combat this problem.

Pig butchering scams have been particularly devastating, causing financial and emotional harm to victims. The FBI's Internet Crime Complaint Center reported a dramatic increase in crypto-related fraud complaints in 2023, with losses totaling $3.96 billion, a 53% increase over the previous year. Reusable KYC, which enables users to verify their identity once and securely reuse that verification with multiple services, is being offered as a solution to limit the amount of personal data available and combat fraud. Ponzi and pyramid schemes continue to trap hapless investors, with fraudulent crypto platforms promising guaranteed returns and eventually imploding, leaving most investors out of pocket.

Rug pulls and pump-and-dump schemes are also common, with unscrupulous developers or project founders shilling new tokens, attracting millions of dollars of investment, and then suddenly removing all liquidity and exiting. Verified data may help investors choose projects more wisely, as legitimate founding team members can use decentralized IDs to build up verified contributions to projects and positive, provable reputations. Physical bitcoin attacks, or wrench attacks, have also been on the rise, with organized crime targeting known industry figures and crypto influencers who flaunt their wealth. Being discreet about one's lifestyle and avoiding public displays of wealth can help protect against these attacks.

The situation is unlikely to improve in the near future, with all signs pointing to it getting worse. Chainalysis warns that 2025 is on track to be the worst year of crypto-related theft so far, with over $2.17 billion already stolen from crypto services as of July. The proliferation of AI agents will make cybercrime even more prevalent, as it will no longer be reliant on a human mastermind. The industry needs time to mature in three key ways: the test of time to see which projects can deliver truly reliable and stable products, learning from incidents to iterate on product designs, and gaining user trust for mature, secure solutions to gradually replace outdated ones and earn widespread user adoption.

Despite the challenges, there is hope on the horizon. AI can be harnessed for good, enabling real-time scam detection, user behavior monitoring, and adaptive threat response. Self-custodial wallets remain inherently secure, and most breaches result from deception, not technical failure. Education is key, and users should be cautious and avoid engaging with suspicious content. Projects like Algebra Labs are leveraging AI to combat fraud and scams, building a new decentralized exchange governed completely by bots. As crypto adoption accelerates and the technology matures, the shadows of crime remain an unavoidable threat. However, with vigilance, user education, smarter security practices, and evolving technology like AI, there is still a fighting chance of avoiding an online apocalypse. The race between defenders and attackers may be a relentless cat-and-mouse chase, but the defenders have the tools and knowledge to stay one step ahead.