Crypto Scam Revenue Projected to Surge Past $12 Billion by 2025, Driven by AI and Sophisticated Fraud

Crypto Scam Revenue on the Rise

Chainalysis, a leading blockchain analytics firm, has released its Crypto Scam Revenue 2024 report, highlighting a concerning upward trend in cryptocurrency scam revenue. The report projects that scam revenue could exceed $12 billion by 2025, driven by the growing sophistication of fraud schemes and the increasing use of generative artificial intelligence (AI).

In 2024, crypto scam revenue reached approximately $9.9 billion, with "pig butchering" scams dominating the landscape. These scams often involve fake romantic relationships to lure victims into fraudulent investment opportunities. Chainalysis warns that as more fraudulent addresses are identified, the projected figures may climb further.

AI Fuels Scam Sophistication

Elad Fouks, head of fraud products at Chainalysis, emphasizes the role of generative AI in making scams more scalable and cost-effective. Fraudsters are leveraging AI to create synthetic identities and bypass identity verification systems. Alarmingly, 85% of scams now involve fully verified accounts, with AI generating realistic fake websites and listings to deceive victims.

The report also highlights the emergence of professional scamming support services, such as Huione Guarantee, a peer-to-peer marketplace offering tools that aid fraudulent operations. This has led to a staggering 1,900% revenue growth for AI-based scam vendors, underscoring the rapid evolution of crypto fraud.

Broader Implications of AI in Scams

The Federal Bureau of Investigation (FBI) has previously warned about the use of generative AI in crypto scams, while Deloitte estimates that AI and deepfakes could cost the U.S. economy $40 billion by 2027. These warnings align with Chainalysis' findings, signaling a growing threat to financial security.

Trends in Illicit Crypto Activity

While total illicit crypto volumes in 2024 may have reached as high as $51 billion, the share of illicit activity compared to the entire crypto market has dropped to its lowest level in three years. However, Chainalysis cautions that losses from AI-driven scams are likely to escalate further as fraudsters refine their tactics.

The report underscores the urgent need for heightened vigilance and advanced security measures to combat the rising threat of crypto scams. As AI technology becomes more accessible, the challenge of mitigating fraud will only intensify.