Cryptocurrency crimes have been a growing concern in recent years, and 2024 appears to have continued this trend based on available data and ongoing developments.
A report from blockchain analytics firm, Chainalysis revealed that last year, cryptocurrency scams amassed at least $9.9 billion in on-chain transactions, a figure expected to grow as more fraudulent addresses are identified. In 2024, funds stolen increased by approximately 21.07% year-over-year (YoY) to $2.2 billion, and the number of individual hacking incidents increased from 282 in 2023 to 303 in 2024.
Crypto fraud has become increasingly sophisticated, with scammers leveraging Al and professionalized fraud networks to exploit victims at an unprecedented scale. The fraud ecosystem has expanded significantly, with operations like Huione Guarantee providing illicit services that fuel scams. These services include technological infrastructure for initiating fraud, money laundering solutions, and cash-out mechanisms for criminals. Among all scam types, high-yield investment scams (HYIS) and pig butchering scams generated the highest crypto revenues in 2024, accounting for 50.2% and 33.2% of total fraud-related inflows, respectively. While HYIS inflows declined by 36.6% year-over-year (YoY), pig butchering fraud surged nearly 40%. YoY, signaling a shift in scam tactics.
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Pig Butchering Scams Expands Globally
Traditionally concentrated in Southeast Asia, pig butchering scams-also known as investment or romance scams-have expanded globally. These scams involve fraudsters building relationships with victims over time to convince them to invest in fake opportunities.
Recent international crackdowns have exposed the global reach of these operations:
- December 2024: Nigerian authorities arrested 88 foreign nationals running an investment scam targeting victims in Europe and the Americas.
- June 2024: Interpol disrupted an international scam network that forced 88 youths in Namibia to conduct fraud schemes.
- October 2023: Malaysian authorities revealed that Peruvian police rescued 43 Malaysians trafficked into a scam operation in Peru.
Fraudsters have also diversified their approach, shifting from long-term cons to quicker scams, such as fake work-from-home job offers that trick victims into depositing funds. Alongside pig butchering, crypto drainers and address poisoning scams have escalated. Crypto drainers grew by 170% YoY, with scammers tricking users into connecting wallets to fraudulent platforms. Address poisoning attacks surged over 15,000%, with scammers mimicking legitimate addresses to deceive victims into sending funds.
Al Fuels the Next Generation of Crypto Fraud
Generative Al has revolutionized fraud tactics, enabling scammers to create synthetic identities, bypass verification controls, and generate realistic fake websites. According to Alterya, 85% of crypto scams now involve fully verified accounts, making fraud prevention increasingly difficult. As scams become more sophisticated, financial institutions and regulators must rapidly adapt to combat the rising threat of Al-powered financial fraud.
Crypto hacking remains a persistent threat, with four years in the past decade individually seeing more than a billion dollars’ worth of crypto stolen (2018, 2021, 2022. and 2023). 2024 marks the fifth year to reach this troubling milestone, highlighting how, as crypto adoption and prices rise, so too does the amount that can be stolen.
Interestingly, the intensity of crypto hacking shifted about halfway through the year. Chainalysis noted that the cumulative value stolen between January 2024 and July 2024 had already reached $1.58 billion, approximately 84.4% higher than the value stolen over the same period in 2023. The ecosystem was easily on track for a year that could rival the $3 billion+ years of 2021 and 2022. However, 2024’s upward trend slowed considerably after July, after which it remained relatively steady.
In terms of the amount stolen by victim platform types, 2024 also saw interesting patterns. In most quarters between 2021 and 2023, decentralized finance (DeFi) platforms were the primary targets of crypto hacks. DeFi platforms were more vulnerable because their developers tend to prioritize rapid growth and bringing their products to market over implementing security measures, making them prime targets for hackers.
Although DeFi still accounted for the largest share of stolen assets in the first quarter of 2024, centralized services were the most targeted in Q2 and Q3. Some of the most notable centralized service hacks include DMM Bitcoin (May 2024; $305 million) and WazirX (July 2024: $234.9 million).
This shift in focus from DeFi to centralized services highlights the increasing importance of securing mechanisms commonly exploited in hacks, such as private keys. Private key compromises accounted for the largest share of stolen crypto in 2024, at 43.8%. After compromising private keys, malicious actors often launder stolen funds by funneling them through decentralized exchanges (DEXs), mining services, or mixing services to obfuscate the transaction trail and complicate tracing.
The need for stronger crypto security
The rise in stolen crypto in 2024 underscores the need for the industry to address an increasingly complex and evolving threat landscape. While the scale of crypto theft has not yet returned to the levels of 2021 and 2022, the resurgence described above highlights gaps in existing security measures and the importance of adapting to new exploit methods. To combat these challenges effectively, a collaborative approach between the public and private sectors is essential.
Data-sharing initiatives, real-time security solutions, advanced tracing tools, and targeted training can empower stakeholders to quickly identify and neutralize malicious actors while building the resilience needed to safeguard crypto assets. Additionally, as crypto regulatory frameworks continue to develop, the scrutiny of platform security and customer asset protection will likely intensify. Industry best practices must keep pace with these changes, ensuring both prevention and accountability.