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

Illicit crypto inflows from Japanese exchanges have dropped in 2024, with ETH scams recording a 69% decline, data shows.

Crypto fraud and scam activity linked to Japanese crypto exchanges dropped significantly in the first half of 2024, according to data from blockchain analytics firm Chainalysis. Reported inflows to clusters identified as scams saw a 69% decline in Ethereum (ETH) and a nearly 50% drop in Bitcoin (BTC) compared to 2023 figures.

In 2023, Japanese exchanges facilitated inflows of $44.6 million in ETH and $11 million in BTC tied to scams. However, ETH-related scam inflows fell to $13.7 million, while BTC dropped to $5.7 million in the first six months of 2024, data shows. Fraudulent activity unrelated to crypto-native scams, including non-crypto-native fraud, also showed a decline, Chainalysis notes, with ETH inflows falling to a nominal $1,171 and BTC fraud-related inflows halving 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

Sophisticated actors are continuously adapting to evade detection, leveraging new wallet addresses and cross-chain tools, Chainalysis said, emphasizing the importance of proactive measures to counter these strategies.

However, the drop in crypto scams comes amid increasing concerns over vulnerabilities in digital payment systems beyond cryptocurrencies. Recent fraud cases involving municipal digital currencies in Japan have drawn attention.

In one instance, Osaka police arrested seven individuals for exploiting Toyonaka City’s regional currency, “machikane points,” using stolen credit card information to obtain fraudulent premium rewards.

Nationwide, multiple municipalities have reported fraud linked to digital currencies, highlighting the risks associated with their rapid adoption. Over 219 municipalities issued regional digital currencies in 2023, up from 32 in 2019, but experts warn that such systems are increasingly targeted by phishing groups.