Chainalysis: ETH Scams Linked to Japanese Crypto Exchanges Drop 69/ in First Half of 2024

Fraudulent crypto activity tied to Japanese crypto exchanges has seen a significant decline in 2024, with Ethereum (ETH) scams dropping by 69%, according to new data from blockchain analytics firm Chainalysis. This decrease reflects a broader reduction in illicit crypto inflows from Japanese exchanges in the first half of the year.

A Drop in Crypto Scam Activity

Chainalysis' latest report reveals that scam-related inflows to Ethereum and Bitcoin (BTC) from Japanese exchanges have notably fallen compared to 2023. In 2023, Japanese exchanges facilitated around $44.6 million in ETH and $11 million in BTC associated with scams. However, in the first six months of 2024, Ethereum-related scam inflows dropped to $13.7 million, while Bitcoin-related scam inflows fell to $5.7 million. This marks a 69% decline for Ethereum and nearly a 50% decrease for Bitcoin.

Additionally, the report highlighted a reduction in fraudulent activity unrelated to crypto-native scams. Ethereum fraud-related inflows declined to just $1,171, and Bitcoin fraud-related inflows halved to $18.8 million during the same period.

Evolving Money Laundering Techniques

Despite the decline in scams, Chainalysis noted that illicit actors continue to adapt their tactics, including using more sophisticated methods for laundering funds. One key strategy is the use of consolidation wallets and decentralized exchanges (DEXs) to convert ETH into stablecoins like Tether (USDT).

"Money launderers are increasingly relying on new wallet addresses and cross-chain tools to move illicit funds, making it difficult to track them in real-time. However, we can still identify common consolidation points from clusters we’ve analyzed to estimate the scale of these activities," explained Chainalysis.

Growing Concerns Over Digital Payment Fraud

While crypto scams have dropped, concerns about fraud in digital payment systems—beyond cryptocurrencies—are growing in Japan. Several high-profile cases involving municipal digital currencies have raised alarms. 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 rewards.

The increase in fraud tied to digital currencies mirrors a rise in the use of these systems. In 2023, over 219 municipalities issued their own digital currencies, a sharp rise from 32 in 2019. However, experts warn that the rapid adoption of these digital currencies has also made them prime targets for phishing and fraud groups.

A Positive Trend Amid Challenges

Despite the growing concerns over non-crypto-related fraud, the overall drop in crypto scams tied to Japanese exchanges signals positive progress in the fight against illicit crypto activities. However, Chainalysis cautioned that fraudsters are continuously evolving their methods to avoid detection, highlighting the need for ongoing vigilance and proactive measures in combating crypto crime.

Conclusion:

The significant drop in ETH-related scams linked to Japanese exchanges in the first half of 2024 represents a positive trend, but the evolving tactics of fraudsters underscore the ongoing challenges in crypto security. As the use of digital currencies expands in both crypto and traditional sectors, it remains crucial to stay ahead of new money laundering techniques and fraud risks.