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

Data shows that illegal crypto inflows from Japanese exchanges fell in 2024, with ETH scams recording a 69% decline.

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

In 2023, Japanese exchanges facilitated the inflow of $44.6 million in ETH and $11 million in BTC due to scams. However, data shows ETH-related fraud inflows dropped to $13.7 million, while BTC fell to $5.7 million in the first six months of 2024. Chainalytics noted that fraudulent activity unrelated to crypto-native scams, including non-crypto-native scams, also showed a decline, with ETH inflows dropping to a nominal $1,171 and BTC fraud-related inflows halving to $18.8 million.

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

“Given the speed with which money launderers use new wallet addresses, it is not easy to track them all individually in real time, but we can still identify common consolidation points from the clusters we identified to estimate the magnitude of these illicit activities.”

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Chainalytics noted that advanced actors are constantly adapting, leveraging new wallet addresses and cross-chain tools to avoid detection, emphasizing the importance of proactive measures against these strategies.

But the decline in crypto scams comes at a time when concerns are growing about vulnerabilities in digital payment systems beyond cryptocurrencies. Recent cases of fraud involving municipal digital currencies in Japan have attracted attention.

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

Numerous municipalities across the country have reported fraud linked to digital currencies, underscoring the risks associated with their rapid adoption. More than 219 municipalities have issued regional digital currencies in 2023, up from 32 in 2019, but experts warn such systems are increasingly targeted by phishing groups.