Chainalysis: ETH scams linked to Japanese crypto exchanges drop 69% in H1 2024

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As a seasoned analyst with over two decades of experience in the financial sector, I have witnessed the ebb and flow of various trends, from traditional stock markets to the burgeoning world of cryptocurrencies. The recent decline in crypto scams associated with Japanese exchanges, as reported by Chainalysis, is indeed a positive development, albeit tentative. However, it’s essential to remain vigilant, for as history has shown, when one door closes, another opens – in this case, to new methods of laundering and fraudulent activities.

2024 saw a decrease in illegal cryptocurrency inflows from Japanese exchanges, as Ethereum (ETH) scams experienced a significant drop of approximately 69%, according to the data.

In the first half of 2024, I noticed a substantial decrease in crypto fraud and scam activity associated with Japanese exchanges, as per data from Chainalysis, a leading blockchain analytics firm. The inflows into clusters suspected to be scams saw a steep drop, with Ethereum (ETH) experiencing a 69% decline and Bitcoin (BTC) nearly halving compared to the numbers from 2023. This is certainly a positive development for the crypto market!

2023 saw Japanese exchanges processing approximately $44.6 million in Ethereum (ETH) and $11 million in Bitcoin (BTC) linked to scams. However, the inflow of ETH tied to scams decreased to about $13.7 million by the first half of 2024, while BTC-related scam inflows dropped significantly to around $5.7 million, according to data. It’s worth noting that Chainalysis reports a decline in fraudulent activities not directly associated with crypto-native scams as well. In fact, ETH inflows related to non-crypto fraud fell to a minimal value of $1,171, and BTC fraud-linked inflows were reduced by half to $18.8 million.

The report highlighted evolving laundering techniques, including the use of consolidation wallets and decentralized exchanges to convert ETH into stablecoins like Tether’s (USDT).

“Considering the rapid pace at which money launderers use new wallet addresses, it’s not easy to track them all individually in real-time, but we can still identify common consolidation points from clusters we’ve identified to estimate the magnitude of these illicit activities.”

Chainalysis

Advanced hackers are persistently finding ways to remain undetected by using fresh wallet addresses and inter-chain technologies, according to Chainalysis, highlighting the need for preventive actions to combat such tactics.

Meanwhile, a decrease in crypto scams is happening at a time when there’s growing worry about weaknesses in digital payment systems that extend beyond cryptocurrencies. Notably, instances of fraud related to municipal digital currencies in Japan have become a focus of attention.

On one occasion, the Osaka police apprehended seven suspects who illegally utilized the local currency of Toyonaka City, called “machikane points.” These individuals obtained these points through unauthorized use of credit card data, aiming to collect undeserved premium rewards.

Across various cities, there’s been an increase in fraud related to digital currencies, underscoring potential dangers as more places adopt these rapidly. In 2023 alone, over 219 municipalities launched regional digital currencies, compared to just 32 in 2019. However, experts caution that these systems are becoming more attractive targets for phishing operations.

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2024-11-22 12:12