Chainalysis breaks down how scammers adapt during the bear market

As crypto traders became wary of making investment decisions amid the Terra collapse in 2022, scammers shifted to free giveaways and romance scams.

While scammers can also feel the chill of the crypto winter as scam revenue drops by 46%, some continue to adapt and thrive despite the bear market. 

In a crypto crime webinar focusing on crimes that affect consumers, Eric Jardine, the cybercrimes research lead at blockchain analysis firm Chainalysis, broke down how scammers shift their strategies as market situations change.

According to Jardine, while the overall crypto scam revenue dropped in 2022, not all scams behaved similarly. He explained that: 

“One of the new innovations in this year’s report was sub-classing scams into types. And there, what we discovered was that not all scams behaved the same way in the context of the bear market.“

While the Terra collapse in 2022 made crypto investors skeptical of investing, scammers turned to other strategies, such as preying on greed with free giveaway scams and playing with people’s hearts through romantic scams. Jardine explained that:

“It’s suggestive here that there is an adaptation on the part of the scammers and market conditions make investment scams unlikely to be profitable; they may be substituting their tactics toward other scams that play on different emotional sense.“

According to data presented by Jardine, as soon as investment scams stop being effective, romance and giveaway scams rise, suggesting that scammers are not simply “playing the same script over and over” and can change depending on the market situation.

Related: FBI warns against rising crypto romance scams during Valentine’s week

Apart from the romance and giveaway scams, the cybercrime professional also highlighted that a multilevel marketing scam took a massive chunk out of the $5.9 billion lost to scams in 2022. Jardine showed that among the top scams in the year, the hyperverse scam racked up around $1.3 billion, roughly 22% of scam revenue in that year.