Scammers have lost more than $500 million on one of 3 blockchains

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Scammers have lost more than $500 million on one of 3 blockchains

In the last nine months of 2022 alone, victims lost more than $500 million on just one of the three blockchains targeted by scammers, according to a new analysis that digital asset intelligence company Inca Digital provided to The Washington Post. The total cost of the scams has probably reached into the billions over each of the last two years, said Ian Schade, a blockchain intelligence analyst at TRM Labs.

Despite the increasing scale of the fraud, federal law enforcement and the large crypto exchanges that scammers use to carry out these scams appear to be behind the efforts to crack down. Federal authorities have yet to arrest any suspect architects of the scheme, which they say is complicated by the fact its perpetrators are concentrated in China and Southeast Asia.

After gaining a substantial haul from a victim, scammers typically move within hours to convert the stolen crypto into traditional currency. With the majority of the scammers operating out of Southeast Asia, often beyond the reach of federal agents, there is little U.S. authorities can do. It may take weeks or longer before victims realize that they are being defrauded and report the crime.

Inca Digital calculated its forecast based on the activities of crypto wallets known to be controlled by scammers. The firm studied those accounts and developed an algorithm to find other such wallets. It traced the crypto that passed through those accounts in two directions: back to where victims first bought them on big cryptocurrency trading platforms, and forward to other platforms and services the scammers use to obscure their trail. The money then goes to another exchange, usually an international operator, where thieves trade the crypto for traditional currency.