In 2024, Pig butchering crypto scams became the biggest threat to crypto users, causing an alarming $3.6 billion in losses, according to a new report by Cyvers, a Web3 security company. These scams, known for their deceitful grooming methods, have gained traction, and experts are warning users about their growing prevalence.
The report highlights a 40% increase in cyberattacks this year compared to 2023, with 165 incidents totalling $2.3 billion in damages. While this was a 37% decline from the fraud peak in 2022, the complexity of the scams and the number of breaches surged significantly in 2024.
The Rise of Pig Butchering Crypto Scams
Pig butchering crypto scams involve scammers grooming victims over time, often starting with unsolicited messages that lure them into fake crypto schemes. Once trust is established, the scammers slowly siphon off larger amounts of money, usually in Tether (USDT), through platforms like Binance, HTX, OKX, Crypto.com, and Coinbase. The illicit funds are laundered through both centralized and decentralized exchanges before being cashed out.
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This method has proven highly effective due to the trust built between the scammer and the victim, allowing the attackers to collect substantial sums over time. The report notes that Ethereum (ETH) has been the primary blockchain targeted by scammers, with the majority of crypto fraud losses attributed to transactions on this network. Around 150,000 addresses and 800,000 fraudulent transactions were involved, with the ease of access to Ethereum playing a key role in facilitating these scams.
Key Attack Vectors Contributing to Crypto Fraud
The Cyvers report identifies several attack vectors contributing to the rise of Pig butchering crypto scams. The most significant damage came from access control breaches, with 67 incidents costing $1.9 billion. Other notable scams targeted vulnerabilities in smart contracts, resulting in losses of $456.8 million across 98 incidents, and address poisoning assaults that led to a $68.7 million loss in a single major case. These attacks highlight the ongoing loopholes in blockchain networks and decentralized applications that scammers are quick to exploit.
One of the largest breaches in 2024 was the WazirX hack, where $235 million was lost due to a vulnerability in its multi-sig wallet system. DMM Exchange was also targeted, resulting in a $305 million loss after attackers compromised a private key in the platform’s Bitcoin (BTC) hot wallet. These incidents underscore the recurring vulnerabilities across many crypto exchanges, making it easier for scammers to operate with relative impunity.
Combating the Surge in Pig Butchering Crypto Scams
The rise of Pig butchering crypto scams highlights the need for improved education and security in the cryptocurrency space. Cyvers CEO Deddy Lavid stressed the importance of educating users about the risks associated with these scams, especially the access control breaches that have been so prevalent this year. Greater transparency in exchange operations, along with enhanced vigilance from users, could help reduce the success rate of these frauds.
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Some recovery efforts have been made in response to the increase in fraud. In 2024, approximately $1.3 billion was returned to victims, partly thanks to on-chain detectives like ZachXBT and various bug bounty programs. However, the scale of the losses in 2024 reveals just how much work remains to combat Pig butchering crypto scams.
A Growing Threat with Ongoing Challenges
Pig butchering crypto scams proved to be the most destructive form of fraud in 2024, resulting in over $3.6 billion in losses. While the industry is making strides to combat these scams, the rise in incidents demonstrates how critical it is for crypto users to remain vigilant and educated about scammers’ evolving tactics.
As the cryptocurrency market continues to expand, addressing vulnerabilities in exchanges and blockchain networks will be essential in reducing the impact of these scams. The rise in Pig butchering crypto scams serves as a stark reminder of the risks involved and the need for continuous improvements in crypto security. Stay updated with the latest developments in the cryptocurrency industry through The BIT Gazette, offering comprehensive insights into current events shaping the sector.
