Crypto Fraud Ecosystem Hits $12.4 Billion as AI, Pig Butchering Powers New Scams

Cryptocurrency scams are on track to reach an unprecedented $12.4 billion in 2024, with artificial intelligence and sophisticated investment schemes driving the surge, according to new data from blockchain analytics firm Chainalysis.

Crypto Investment Scams Set to Hit Record $12.4 Billion in 2024

The firm's latest report reveals that cryptocurrency-based fraud has already accumulated $9.9 billion in illicit proceeds this year, with high-yield investment schemes and "pig butchering" scams accounting for more than 83% of all crypto fraud revenues.

High-yield investment scams remained the dominant form of crypto fraud, representing 50.2% of all scam revenue in 2024. However, these schemes saw a 36.6% decline from the previous year as fraudsters increasingly shifted toward more elaborate "pig butchering" operations, which grew by nearly 40% year-over-year.

"The rise in 'pig butchering' scams is a sobering reminder of how fraudsters are evolving to exploit trust in increasingly sophisticated ways," commented Aggelos Armenatzoglou, the Head of Dealing at Deriv. "The growing trend of trust-based scams not only jeopardize individual traders, but they also undermine the credibility and stability of the crypto and trading sectors as a whole."

In August of last year, Chainalysis reported that hackers had stolen nearly $1.6 billion in cryptocurrency over the first eight months of 2024—almost matching the total amount stolen throughout 2023.

1/10 Today, we published our scams section of our Crypto Crime Report, revealing that 2⃣0⃣2⃣4⃣ is set to be a record-year for scammers. What else did we find? We’ve pulled some of the most interesting figures in the 🧵thread below 👇

"The identity verification system used by LinkedIn, where company team members verify each other before engaging in business, is the way forward," commented Aran Hawker, the CEO at CoinPanel. "This approach could help prevent high-yield investment scams by ensuring a legitimate financial service company is involved."

AI-Powered Crypto Scams Surge 40% as Fraudsters Target Retail Investors

The rise of artificial intelligence has dramatically lowered the barriers to entry for scammers. Chainalysis found that AI service vendors on illicit platforms saw revenue growth of 1,900% since 2021, enabling fraudsters to create more convincing fake personas and automated scam operations.

“GenAI is amplifying scams, the leading threat to financial institutions, by enabling high-fidelity, low-cost, and highly scalable fraud that exploits human vulnerabilities,” said Elad Fouks, head of fraud products at Chainalysis and co-founder of Alterya. “It facilitates the creation of synthetic and fake identities, allowing fraudsters to impersonate real users and bypass identity verification controls.”

“Additionally, GenAI enables the generation of realistic fake content, including websites and listings, to power investment scams, purchase scams, and more, making these attacks more convincing and harder to detect,” said Fouks.

One notable case involved Smart Business Corp, a decade-old Ponzi scheme targeting Spanish-speaking countries, which has received $1.5 billion in cryptocurrency transfers after promising outsized returns through a tiered investment scheme.

7/10 In 2024, Huione scam technology vendors collectively received at least $375.9 million in cryptocurrency. 🤖 AI service vendors’ revenue had a compound annual growth rate of 1900% between 2021-2024, indicating an 💣explosion in the use of AI technology to facilitate scams. pic.twitter.com/JUocIYKEY9

Expensive Bitcoin = More Scams

The surge in crypto prices, coupled with increased retail investor interest following recent market rallies, has created an ideal environment for fraudsters. Chainalysis data shows that scam operations are becoming increasingly interconnected, with sophisticated infrastructure providers offering turnkey solutions for aspiring fraudsters.

"Addressing this threat demands a collective response," added Armenatzoglou. "Strong regulatory safeguards and robust security frameworks are important steps. Equally critical is creating a culture of awareness and education within the trading community."

Law enforcement agencies worldwide are struggling to keep pace with the evolving threat. The FBI's Internet Crime Complaint Center reported that cryptocurrency-related suspicious activity reports have increased by 43% since 2020, with elderly victims particularly vulnerable to these schemes.

A separate report from Cyvers revealed that 3 out of 4 crypto thieves remain unpunished, walking away with over $1 billion acquired through fraudulent means.