Although scammers have been taking advantage of the Covid-19 crisis, data shows that cryptocurrency scams overall are making less than ever since early March, when the Covid-19 crisis intensified in the western world.

According to cryptocurrency crime tracking startup Chainalysis, the total daily value sent to cryptocurrency scams dropped 61% between March 13 and March 31, though it has recovered some since then. Nearly all of the scam revenue losses so far are concentrated to investment scams and Ponzi schemes, two scam sub-categories that together make up the vast majority of cryptocurrency scamming activity.

But while Covid-19 has hurt that set of scammers, it’s giving others who favor email spamming tactics new stories they can use to try and fool their victims.

Phishing scammers have been building their narratives around Covid-19, and Blackmail scammers continue contact victims through email typically claiming to have compromising information on their victim.

While it’s unlikely that no scammers have been successful exploiting Covid-19, the Chainalysis' data shows that scams overall are receiving much less cryptocurrency since the crisis intensified in early March than they were previously. The reson is that any extra money potentially being generated by Covid-19 fraud and extortion scams is well outpaced by the huge drop offs in money being sent to Ponzi schemes and other types of cryptocurrency investment scams.

Ponzi schemes and investment scams take in much more than all other cryptocurrency scam types. Together, they received 95% of all funds sent to cryptocurrency scams in 2019. Phishing and extortion scams are a drop in the bucket by comparison. But since the week ending March 8, the weekly average amount being sent to investment scams and Ponzi schemes dropped by 33%, from $4.2 million to just under $2.9 million.

Ponzi schemes and investment scams typically pitch victims on investing in a new token or cryptocurrency business, enticing them with promises of high yields. Perhaps that message fools fewer people in the midst of huge cryptocurrency price drops and general concerns around an economic downturn. However, that doesn’t appear to be the case.

Chainalysis says that the total weekly value received and number of individual transfers made to the twenty most active Ponzi schemes and investment scams, which together make up 94% of all scam activity in 2020. Until this past week, the number of individual transfers to Ponzi schemes and investment scams remained consistent, suggesting they reached the same number of victims. However, the weekly total value received by those scams fell, suggesting those victims were sending less value per transfer. Digging deeper, Chainalysis fould that the loss of value is caused almost entirely by cryptocurrency price drops. Most of these scams have received the same or more value per day in their native coins since the crisis intensified in early March.

"It likely comes down to how Ponzi schemes and investment scams solicit “investments” from victims. Most of them ask for the same low, flat amount from victims — usually a figure like 0.2 BTC — in all their advertisements across email, YouTube, social media, and on their own websites. We believe scammers are still receiving those same payments from roughly the same number of victims per month. The payments are just worth less now due to cryptocurrency price drops."

-- Chainalysis

In short, while Covid-19 is providing phishing and blackmail scammers with new fraudulent stories to entice victims, the cryptocurrency price drops spurred by the pandemic have drastically reduced the revenue of the Ponzi schemes and investment scams that make up most cryptocurrency scamming activity. But while the majority of phishing and blackmail scams exploiting Covid-19 don’t appear to have been successful so far, we can’t write them off as a threat, especially with so many set to receive relief money from the government — a potential revenue source scammers are surely thinking about. Plus, the evidence suggests that the scammers exploiting Covid-19 are quite active in other areas of cybercrime.

Based on the techniques they’re using, Chainalysis believes the cybercriminals exploiting Covid-19 for cryptocurrency scams are the same ones behind most phishing and blackmail scams.

Cybersecurity firm Sophos recently alerted us to a cryptocurrency scam exploiting Covid-19 that’s received some publicity in the UK. This scam follows the blackmail model we discussed above, in which the scammer emails victims threatening to infect their families with Covid-19.

Sophos provided Chainalysis with the cryptocurrency addresses to which this scammer directed victims to send payments. Using Chainalysis Reactor, Chainalysis was able to see that one of the addresses received a $950 payment from one victim. Since that address had undergone a transaction, Chainalysis analyzed it further and eventually connect it to several other addresses they could confirm they were controlled by the same person or group. The firm found that many of those addresses had been used in prior phishing scams, in addition to several attempted ransomware attacks and darknet market transactions before the pandemic.