Three Crypto Scams to Watch Out For in 2024

In January 2024 alone, cryptocurrency projects lost $127 million to hacks and fraud, six times more than in January 2023 and three times more than in December. Meanwhile, crypto industry losses from breaches more than halved in 2023 compared to 2022. Should we expect this decline to continue — or are we on the brink of a new outbreak of scams?

The number of cryptocurrency scams has declined

Data from TRM Labs shows that from January to November 2023, cybercriminals stole approximately $1.7 billion in 160 attacks, compared to nearly $4 billion in 2022. Chainalysis reported similar figures, adding that the number of cryptocurrency fraud proceeds decreased by 29.2% by the end of 2023. The organization noted that the volume of illicit transactions fell for the first time since 2020.

Factors that cause hackers to decline

The following three key factors may help reduce the losses caused by hacking attacks in the crypto industry in 2023:

• Enhanced security measures, including real-time transaction monitoring and anomaly detection systems;

• Law enforcement efforts are increasing around the world to tackle cybercrime involving digital currencies;

• Improved industry coordination, with cryptocurrency exchanges, wallet providers, and blockchain networks more actively sharing information about vulnerabilities and threats.

As DeFi protocols have become more secure, the revenue of major hacker groups has declined. For example, the revenue of the notorious Lazarus and Kimsuky groups fell from $1.7 billion in 2020 to $1 billion in 2023, even though the number of platforms they attacked increased.

Market Cycles and Crypto Scams

The decrease in cryptocurrency scams since 2021 is related to the decrease in market activity. We have been trying to get out of the crypto winter for the past two years, and people are very cautious with their money. Conversely, a bull market is when a large number of users are afraid of missing out, so they are easily fooled by fraudulent proposals that promise quick returns.

The BTC halving will be a major factor in the bullish sentiment in 2024. We have already seen that it is translating into one of the largest airdrop seasons expected. As a result, the number of people being phished by fake airdrop sites is increasing. As the market recovers, we are likely to see more and more of these and many other types of scams.

3 Cryptocurrency Crime Predictions for 2024

1. Cross-chain bridge hacking

New Year’s Eve was not fun for the Orbit Bridge team — hackers attacked the cross-chain protocol. The intruders managed to withdraw more than $80 million worth of crypto assets. Ozys, the company behind the development of the protocol, suspected that a former employee facilitated the hack.

Cross-chain bridge hacks could become the dominant type of cryptocurrency crime in 2024. With the development of DeFi 2.0 and the increasing integration of various blockchains, cross-chain bridges are becoming a core element of crypto infrastructure, but vulnerabilities often remain. The funds that support bridged assets on the receiving blockchain must be stored somewhere, and this storage is often targeted by attacks. Enhanced security measures and rigorous code audits are needed to address this issue.

2. Fake airdrops : a classic method of large-scale fraud

As the crypto winter recovers, many projects have launched airdrop programs to benefit from the increased market activity. Scammers are also profiting from this: they launch fake airdrop portals, impersonating legitimate projects or influencers, and offer users the opportunity to connect their wallets. Once the victims do so, their funds disappear.

With the Bitcoin halving just around the corner, we may witness a rise in FOMO sentiment, with people ready to invest their money without doing due diligence. This may lead to an increase in the number of fake airdrops.

3. Deepfake videos on YouTube and other social media

Another example of scams in the recovery market is the recent Solana scam. The platform’s TVL has nearly doubled since December 2023, accompanied by a surge in the price of the SOL coin. Deepfake videos of Solana co-founder Anatoly Yakovenko began to appear on YouTube, promising to double the funds for everyone who scanned the QR code. Needless to say, those who transferred funds to the fraudsters never saw their tokens again.

Similar deepfake videos on social media feature CZ, Elon Musk, and other influential figures. As AI enables more realistic “artworks,” it may become one of the main scam types in the (hopefully) optimistic 2024.

Why we should be wary in 2024

The amount of funds stolen in cryptocurrency hacks and scams has fallen dramatically over the last year. Protocols have become more secure, and mixed market sentiment is not conducive to scammers' success. However, as the industry rebounds and new technologies emerge, we may see an increase in cryptocurrency fraud in 2024 - and it looks like this is already happening. Take care, and may your funds remain safe as the bull run begins.