Key Points
- Illicit crypto inflows from Japanese exchanges have significantly decreased in 2024.
- ETH scams recorded a 69% decline, while Bitcoin-related scams saw a nearly 50% drop.
In 2024, the first half saw a substantial reduction in fraudulent activity related to Japanese cryptocurrency exchanges. Data from blockchain analytics firm Chainalysis reveals a 69% decrease in scams involving Ethereum (ETH) and an almost 50% decline in Bitcoin (BTC) scams compared to the previous year.
Scam Inflows in 2023 and 2024
In 2023, scams tied to ETH and BTC facilitated by Japanese exchanges amounted to $44.6 million and $11 million, respectively. However, in the first half of 2024, ETH-related scam inflows dropped to $13.7 million, and BTC scams fell to $5.7 million. Chainalysis also noted a decrease in fraudulent activity not directly related to cryptocurrency scams, with ETH inflows dropping to a nominal $1,171 and BTC fraud-related inflows halving to $18.8 million.
The report also highlighted evolving money laundering techniques, such as the use of consolidation wallets and decentralized exchanges to convert ETH into stablecoins like Tether’s (USDT).
Adaptation of Fraudulent Actors
According to Chainalysis, sophisticated actors are constantly adapting to avoid detection. They are leveraging new wallet addresses and cross-chain tools, emphasizing the need for proactive strategies to counter these tactics.
Despite the decrease in cryptocurrency scams, concerns are growing over vulnerabilities in digital payment systems beyond cryptocurrencies. Recent fraud cases involving local digital currencies in Japan have raised eyebrows.
In one case, Osaka police arrested seven people for exploiting Toyonaka City’s regional currency, “machikane points,” using stolen credit card information to obtain fraudulent premium rewards.
Across the country, several municipalities have reported fraud related to digital currencies, underlining the risks associated with their rapid adoption. In 2023, more than 219 municipalities issued regional digital currencies, a significant increase from 32 in 2019. However, experts caution that these systems are increasingly targeted by phishing groups.