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The cryptocurrency industry is constantly evolving. As adoption grows worldwide, criminals are capitalizing on the moment and finding new ways to facilitate scams using crypto. As a relatively new financial system, cryptocurrency presents both unique challenges and opportunities to fight these crimes. For law enforcement agencies, scaling capabilities to combat crypto-facilitated crime can feel daunting, but doing so is paramount. New research from Chainalysis reveals crypto investment scams are on the rise and hurting everyday people.
The good news is that scams conducted using crypto are easier to investigate than those facilitated by traditional currency. All cryptocurrency transactions are recorded on a transparent, immutable financial system called the blockchain, making criminal investigations conducted on this infrastructure more straightforward than those done using traditional payment rails. In this article, we’ll discuss prominent scams harming everyday citizens and how law enforcement agencies can use blockchain technology to stop them and help make victims whole.
PIG BUTCHERING SCAMS ARE ON THE RISE
In 2024, scams facilitated with crypto received at least $9.9 billion in revenue. Pig butchering scams, a form of investment scam, absorbed over 30% of those revenues. Also known as romance scams, pig butchering schemes are mostly executed from large compounds in Southeast Asia. Scammers target individuals via social media and messaging apps, build relationships over time, and convince victims to invest in fraudulent crypto opportunities. With losses in the billions worldwide, the news is teeming with stories on these crimes’ destructive impact; some victims are losing their life savings, others are succumbing to despair and even suicide.
Compounding the problem, emerging AI technology makes these scams even easier to conduct. Generative AI can produce fake personas and realistic websites and content, all of which make scams more convincing and harder to detect. For example, one large peer-to-peer marketplace called Huoine Guarantee offers a host of products and services that support these scams. For as little as $200 in crypto, customers can buy an AI technology service that alters one’s facial appearance, which scammers often use to deceive targets.
Recently, pig butchering scammers have also turned their attention toward employment (or work-from-home) scams, which typically yield smaller but faster victim deposits. While these schemes targeted victims in Asia at the outset, scammers shifted focus to North American and European targets last year.
Crypto ATMs have also become a popular tool for scammers to receive payouts. The Federal Trade Commission (FTC) reported that losses related to crypto ATMs exceeded $65 million in just the first half of last year. In a crypto ATM scam, bad actors often impersonate tech support personnel or government officials, urging victims to deposit cash into a crypto ATM for help with fixing a malware-infected computer or to send tax payments they don’t really owe. Last year, a Midwestern victim was scammed into depositing $15,000 into a Bitcoin ATM based on a fraudulent tech support scenario. However, quick reporting by the victim positively influenced the case; investigators used blockchain technology to trace the transactions, bring a case and guilty verdict against the scammer, and initiate the process of making the victim whole.
HARNESSING BLOCKCHAIN ANALYSIS AND BUILDING LAW ENFORCEMENT COALITIONS TO FIGHT CRYPTO SCAMS
With crime facilitated by crypto exceeding $40 billion last year, law enforcement and investigators need the right technology and processes to evaluate blockchain data and follow funds tied to crypto crime. Given the relative novelty of cryptocurrency, local police departments are often ill-equipped to handle reports of crimes involving crypto, leaving victims frustrated and hopeless. Yet, leveraging blockchain transparency can help law enforcement and other authorities trace criminal activity quickly and efficiently.
Using blockchain analysis technology, investigators can easily discover leads, analyze transaction activity, pursue threats and build cases that lead to prosecuting criminals and compensating victims. Blockchain analysis platforms can support everything from triaging initial reports of illicit crypto activity to investigating and seizing assets. These platforms also improve interagency and private sector collaboration and working relationships with regulators.
One collaboration success story, Operation Spincaster, demonstrates the effectiveness of a coordinated approach. By combining advanced blockchain tracing capabilities, data and targeted training, investigators identified and traced thousands of compromised wallets, amounting to over $187 million in losses. This example highlights the importance of global enablement, collaboration and regulation in preventing scams and protecting consumers.
As crypto adoption grows worldwide, criminal tactics grow in complexity, too. Analysts and investigators need comprehensive blockchain intelligence technology and streamlined processes to generate leads, conduct investigations, disrupt illicit on-chain activity and seize assets. While investment scams like pig butchering continue to evolve and grow, leveraging AI technology and sophisticated tactics, law enforcement must adapt to protect citizens and disrupt crime on the blockchain.
With our recent acquisition of Alterya, Chainalysis is now leveraging AI-powered fraud and scam detection to better equip customers to meet these challenges. By engaging with Chainalysis, law enforcement can enhance investigations, disrupt illicit activity and bring criminals to justice. Explore these trends and insights in the 2025 Crypto Crime Report and learn how crypto’s transparency is creating unique opportunities for law enforcement in lead discovery, investigation and resolution of cases.