The economic impact from the COVID-19 outbreak is even hitting crypto scammers, forensics firm Chainalysis found.
Research out Friday shows profit made through cryptocurrency scams has dropped considerably since the start of the year. On a seven-day moving average, revenue earned by scammers plummeted from $800,000 worth of crypto in the middle of January to below $300,000 at the beginning of April – almost entirely due to the dramatic market drop earlier this year.
Researchers initially thought the coronavirus might make people less susceptible to scams. But they found that just as many people were being affected. The number of individual transfers – the number of payments sent to scammers – actually hit a year-to-date high at the start of April.
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What Chainalysis concluded was that the major sell-off in cryptocurrencies sparked by the coronavirus – total market cap fell by $100 billion in mid-March, according to CoinGecko – had a knock-on effect on scammers’ revenue.
“We believe scammers are still receiving those same payments from roughly the same number of victims per month. The payments are just worth less now due to cryptocurrency price drops,” Chainalysis said in its report.
“In short, while COVID-19 is providing phishing and blackmail scammers with new fraudulent stories to entice victims, the cryptocurrency price drops spurred by the pandemic have drastically reduced the revenue of the Ponzi schemes and investment scams that make up most cryptocurrency scamming activity.”
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This drop in scam revenue is likely to be temporary; cryptocurrencies are already rebounding and CoinDesk data shows bitcoin has regained most of its losses since the coronavirus sell-off. As market fortunes return, scammers may be one of the first groups to feel the benefits.