The State of Crypto Crime in 2024: A Comprehensive Overview

Crypto Impact Hub

Crypto Impact Hub

— 10 min read
The State of Crypto Crime in 2024: A Comprehensive Overview
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As the cryptocurrency and Web3 industries continue to evolve and mature, they remain prime targets for cybercriminals and fraudsters. In 2024, we've seen a complex landscape of hacks, scams, and security breaches that have significantly impacted the sector. This article provides a detailed analysis of the major trends and incidents in crypto crime throughout the year.

According to reports from Immunefi and Chainalysis, the total value of cryptocurrency stolen through various illicit activities in 2024 has already surpassed $1.2 billion across more than 150 incidents. This represents a 15.5% increase compared to the same period in 2023, indicating that despite improved security measures, criminals are adapting their tactics to exploit vulnerabilities in the crypto ecosystem.

Decentralized Finance (DeFi): Opportunities and Risks
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Hacks and Exploits

DeFi Remains the Primary Target

Decentralized Finance (DeFi) platforms continued to be the most targeted sector within the crypto space. The open-source nature of many DeFi protocols, combined with the high value of assets locked in these platforms, makes them attractive targets for hackers.

Notable DeFi hacks in 2024 include:

  1. Ronin Network: Lost $12 million in August, highlighting that even established projects can fall victim to sophisticated attacks.
  2. Nexera: A DeFi protocol that suffered a $1.5 million loss, also in August.
  3. SonneFinance: A decentralized lending protocol that lost $20 million in May.

Blockchain-Specific Vulnerabilities

Certain blockchains have been disproportionately targeted:

  1. Ethereum: Remained a primary target, accounting for 43% of total losses across all chains in May 2024.
  2. BNB Chain: Experienced significant attacks, representing 19% of overall losses in the same period.
Common Tactics Used in Crypto Rug Pulls in 2024
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Scams and Rug Pulls

While the total value lost to scams decreased compared to previous years, they remain a significant threat:

  1. Pig Butchering Scams: These sophisticated, long-term scams have become increasingly prevalent, with one notable syndicate netting over $100 million in 2024.
  2. Short-lived Scams: There's been a trend towards shorter, more lucrative scam campaigns, moving away from elaborate Ponzi schemes.
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Exchange Issues

While centralized exchanges have improved their security measures, they're not immune to problems:

  1. Liquidity Issues: Some smaller exchanges faced liquidity crises, leading to user fund freezes.
  2. Regulatory Crackdowns: Increased regulatory scrutiny led to some exchanges limiting services or exiting certain markets.

The NFT market has seen its share of criminal activity:

  1. Wash Trading: Artificial inflation of NFT prices through self-dealing remained a concern.
  2. Phishing Attacks: Several high-profile NFT collections were targeted through sophisticated phishing schemes.
  3. Counterfeit NFTs: The creation and sale of fake NFTs purporting to be from popular collections continued to plague the market.
NFT Scams and Crypto Hacking
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Celebrity and Influencer Hacks

High-profile individuals in the crypto space remained targets:

  1. Social Media Account Takeovers: Several crypto influencers had their social media accounts hacked to promote scams.
  2. SIM Swapping: This technique was used to gain access to celebrity wallets and accounts.

Ransomware

Cryptocurrency remains the preferred payment method for ransomware attackers:

  1. Increased Sophistication: Ransomware groups have become more organized and targeted in their approaches.
  2. Double Extortion: Many attackers now not only encrypt data but threaten to leak it, increasing pressure on victims to pay.

Emerging Threats

Several new trends in crypto crime emerged or gained prominence in 2024:

  1. AI-Enhanced Attacks: Criminals began leveraging AI to create more convincing phishing attempts and social engineering schemes.
  2. Cross-Chain Exploits: As interoperability between blockchains increased, so did attacks targeting cross-chain bridges and protocols.
  3. Layer 2 Vulnerabilities: With the growth of Layer 2 scaling solutions, new attack vectors specific to these technologies emerged.

Regulatory Response and Industry Efforts

In response to these threats, both regulators and the industry have taken steps:

  1. Enhanced KYC/AML: Stricter Know Your Customer and Anti-Money Laundering policies have been implemented by many platforms.
  2. Improved Security Audits: There's been an increased focus on thorough security audits, especially for DeFi protocols.
  3. Bug Bounty Programs: Platforms like Immunefi have seen increased participation in their bug bounty programs, incentivizing white hat hackers to find and report vulnerabilities.
  4. Regulatory Frameworks: Many jurisdictions have introduced or updated regulations specifically targeting cryptocurrency-related crimes.
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New 2024 Crypto Scams

 some key new types of crypto scams that emerged or gained prominence in 2024 include:

  1. AI-Enhanced Attacks: Scammers began leveraging artificial intelligence to create more convincing phishing attempts and social engineering schemes.
  2. Cross-Chain Exploits: As interoperability between blockchains increased, attacks targeting cross-chain bridges and protocols became more common.
  3. Layer 2 Vulnerabilities: With the growth of Layer 2 scaling solutions, new attack vectors specific to these technologies emerged.
  4. Shorter-lived Scams: There's been a trend towards shorter, more lucrative scam campaigns, moving away from elaborate Ponzi schemes. The average lifespan of scams decreased significantly, from 271 days in 2020 to just 42 days in 2024.
  5. "Pig Butchering" Scams: These sophisticated, long-term scams became more prevalent, with scammers building relationships with victims before pitching fraudulent investment opportunities.
  6. Address Poisoning: This technique involves scammers manipulating wallet addresses to trick users into sending funds to the wrong recipient.
  7. Romance Scams in Crypto: Traditional romance scams adapted to incorporate cryptocurrency, often targeting individuals through private channels like text messages.
  8. Fake Mobile Apps and Wallets: An increase in counterfeit mobile applications designed to mimic legitimate crypto platforms.
  9. Blackmail Scams using Deepfake Technology: Scammers leveraged advancements in deepfake AI to create more convincing blackmail attempts.
  10. Targeted DeFi Exploits: While overall DeFi hacking decreased, more sophisticated and targeted attacks on decentralized finance protocols emerged.

These new trends highlight the evolving nature of crypto scams, with criminals adapting their tactics to exploit new technologies and target victims more effectively.

Cryptocurrency Hacks, Glitches, Rug Pulls, and Scams in 2024
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2023 vs 2024 Crypto Crime

here are some key differences between crypto scams in 2023 and 2024:

  1. Overall decrease in losses:
    • There was a 20% decrease in losses from hacks and rug pulls in 2024 compared to 2023. By May 2024, losses totaled $473.22 million across 108 incidents, down from $595.43 million in the same period in 2023.
  2. Shift in scam tactics:
    • In 2024, there's been a move away from elaborate Ponzi schemes towards more targeted campaigns like "pig butchering" scams.
    • Scammers are conducting shorter but more lucrative and regenerative campaigns.
  3. Lifespan of scams:
    • The average lifespan of scams has decreased significantly. In 2020, scams were active for an average of 271 days, while in 2024, this dropped to just 42 days.
  4. Use of new wallets:
    • In 2024, 43% of year-to-date scam inflows went to wallets that became active that year, compared to 29.9% in 2022. This suggests a surge in new scams using fresh wallets.
  5. Types of scams:
    • While hacks remained the predominant cause of losses in 2024, rug pulls (fraud events) became less significant, accounting for only 3.3% of total losses in May 2024.
  6. Targeted networks:
    • Ethereum and BNB Chain emerged as the most targeted networks in 2024, accounting for 62% of total losses.
  7. DeFi vs CeFi:
    • In 2024, decentralized finance (DeFi) platforms suffered most of the exploits, while centralized finance (CeFi) platforms reported no major attacks.
  8. Increased sophistication:
    • Scammers in 2024 are becoming more sophisticated, using new tactics to target victims, including the use of AI-enhanced attacks and cross-chain exploits.
  9. Rise in romance scams:
    • There's been a growing concern about romance scams in 2024, with scammers using private channels like text messages to communicate with victims.
  10. Geographic shifts:
    • There are indications of increased activity from China-based vendors in certain types of crypto-related crimes, particularly in the distribution of child sexual abuse material (CSAM).

These differences highlight the evolving nature of crypto scams and the need for continued vigilance and adaptation of security measures in the crypto space.

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How can I protect myself from pump-and-dump schemes

here are some key ways to protect yourself from pump-and-dump schemes:

  1. Conduct thorough research: Investigate the company, its financials, management team, and business model before investing. Look for credible information from multiple sources.
  2. Be skeptical of hype: Be cautious of investments being promoted with exaggerated claims, promises of guaranteed returns, or urgent calls to buy immediately.
  3. Question sudden price spikes: Be wary of stocks that experience a rapid rise in price without any fundamental reasons or news to justify it.
  4. Verify information sources: Don't rely solely on social media posts, online forums, or unsolicited investment advice. Verify information from credible, independent sources.
  5. Be cautious with penny stocks: Pump-and-dump schemes often target micro-cap or penny stocks. These are more susceptible to manipulation due to low liquidity.
  6. Watch for unusual trading volume: A sudden surge in trading volume without apparent reason could be a sign of manipulation.
  7. Use common sense: If an investment opportunity sounds too good to be true, it probably is. Question the logic behind any investment decision.
  8. Avoid unsolicited investment offers: Be wary of cold calls, spam emails, or unsolicited tips about "hot" investment opportunities.
  9. Check for transparency: Legitimate projects should have clear information about their team, goals, and financials. Be cautious of those lacking transparency.
  10. Use secure platforms: When investing in cryptocurrencies, use reputable exchanges and wallets. Be wary of new or unverified platforms.
  11. Implement security measures: Use a virtual private network (VPN) and enable two-factor authentication on your accounts to enhance security.
  12. Stay informed: Keep up-to-date with common scam tactics and educate yourself about the markets you're investing in.

Remember, the best defense against pump-and-dump schemes is a combination of skepticism, thorough research, and cautious investing practices.

Conclusion

While the total value lost to crypto crime in 2024 has increased compared to the previous year, it's important to note that this is happening against a backdrop of significant growth in the overall crypto market. The share of all crypto transaction volume associated with illicit activity actually decreased to 0.34% from 0.42% in 2023, according to Chainalysis.

However, the evolving nature of threats in the crypto space underscores the need for continued vigilance, improved security measures, and user education. As the industry matures and regulatory frameworks become more robust, it's hoped that the incidence and impact of crypto crimes will continue to decrease relative to the overall market size.

For users, the key takeaway remains the same: practice good security hygiene, be wary of too-good-to-be-true offers, and always verify the legitimacy of projects before investing. As the crypto ecosystem continues to evolve, so too must our approaches to security and fraud prevention.

Citations:
[1] https://www.trendmicro.com/en_us/research/24/g/crypto-crime-2024-report-part-ii.html
[2] https://www.chainalysis.com/blog/2024-crypto-crime-mid-year-update-part-2/
[3] https://coinbound.io/nft-stats/
[4] https://finance.yahoo.com/news/crypto-stolen-2024-tops-1-214544179.html
[5] https://tokenpost.com/Crypto-Losses-Surge-in-2024-Amid-Rising-Hacks-and-Rug-Pulls-Report-Reveals-11938
[6] https://beincrypto.com/crypto-hacks-rug-pulls-decreased-2024/
[7] https://www.chainalysis.com/blog/2024-crypto-crime-report-introduction/
[8] https://www.cryptoglobe.com/latest/2024/08/over-1-2b-in-crypto-stolen-by-hackers-so-far-in-2024-reports-immunefi/

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