Kim Grauer, director of research at Chainalysis, said there has been a “pushback” in funds received by cryptocurrency scam addresses during the bear market. Other forms of financial crime in the world of digital assets, such as ransomware, do not reflect the same trend.

Scams track the market

as grauer explained told Yahoo Finance on Thursday, fraud is the largest subset of criminal activity on the blockchain. Chainalysis data shows that scams were the biggest source of income for criminals in 2021, with a net profit of $7.7 billion in 2021 alone.

Although it remains a “leader of the pack” in 2022, the director noted that its prevalence tends to expand and shrink along with the broader crypto market. Therefore, with the price of Bitcoin stuck in a constant downward trend throughout the year, the scams have been less successful in turn.

Grauer believes that the correlation is natural. “[A scam] it is someone who willingly part with their funds in the hope of seeking a higher return.”

“You can compare that to something like ransomware, where there really isn’t a market base for the number of ransomware attacks out there,” he added. “It really is happening continuously all the time.”

The scam ecosystem is also evolving with each market cycle. Law enforcement is learning to crack down on related schematics.

That said, the scammers’ methods are also becoming more sophisticated with each crypto winter. Cryptocurrency romance scams and corporate/government imposters garnered over $300 million from victims between January 2021 and March 2022.

Investment scams remain the most common and profitable in the industry today. Grauer advised investors to be on the lookout for projects with anonymous founders that promise unrealistic returns when investigating these schemes.

In late October, an anonymous party claiming to be affiliated with the hit Netflix series “Squid Game” pumped out the “Squid Game Token.” after plotting astronomical profits after the launch, investors finally pulled carpet while the founders vanished with barely a word.

The growth of ransomware crime

Ransomware is malicious software used to block access to a victim’s computer or threaten to release their personal data until they lose a sum of money. Cryptocurrency is extremely popular as a payment method in such schemes as it allows extortionists to remain anonymous and keep their transactions irreversible.

Ransomware generated more than $602 million for scammers in 2021, according to official numbers of Chainalysis in February. The actual figure is expected to be higher.

In August, political comedy host John Oliver took aim at the privacy coin Monero for implicitly supporting ransomware attacks through its marketing. “There’s a pretty clear undercurrent to what they’re selling there,” he said in response to one of his ads.

While cryptocrime weighs heavily on the minds of regulators and experts, some statistics suggest that it is not worth the coverage it receives. Like the US Treasury Department. admits, fiat money is still much larger than Bitcoin for money laundering. Also, a Chainalysis report in February showed that the proportion of illicit transactions in crypto is trending much lower each year.