In 2024, the cryptocurrency industry witnessed an unprecedented surge in scams, with revenues potentially reaching a record-breaking $12.4 billion, according to blockchain analytics firm Chainalysis.
The rise of artificial intelligence (AI) and the proliferation of “pig butchering” scams have significantly contributed to this alarming trend, marking a new era of sophisticated cybercrime.
Additionally, recent U.S. sanctions against Funnull Technology Inc., a Philippines-based firm, highlight efforts to dismantle the infrastructure enabling these fraudulent schemes.
Chainalysis reports that AI technologies, particularly generative AI (GenAI), have become a game-changer for cybercriminals.
Scammers are leveraging AI to create highly convincing fraudulent content, including phishing emails, fake investment platforms, and deepfake videos or synthetic voices that mimic trusted individuals like family members or executives.
These tools add a layer of realism that makes scams harder to detect, enabling fraudsters to operate at unprecedented speed and scale.
For instance, AI-assisted pig butchering scams involve scammers building trust with victims over weeks or months before luring them into fake crypto platforms.
Voice cloning and real-time scam calls further amplify the deception, with AI-generated content bypassing traditional security measures like KYC checks on legitimate platforms.
The accessibility of AI tools has lowered the barrier for entry, allowing scammers to automate and scale their operations.
Chainalysis notes that AI service vendors on illicit marketplaces, such as Huione Guarantee, saw 1,900% revenue growth since 2021, generating $18 million in 2024 alone from selling scam-enabling software.
One case highlighted by Chainalysis showed a wallet receiving proceeds from a pig butchering scam just three days after purchasing AI software, demonstrating the rapid execution enabled by these tools.
This “industrialization” of fraud, as described by Jacqueline Burns Koven, Head of Cyber Threat Intelligence at Chainalysis, has transformed scammers into highly organized networks, exploiting human vulnerabilities with precision.
Pig butchering scams, a form of romance or investment fraud, have become a cornerstone of crypto-related crime, with revenues increasing nearly 40% year-over-year in 2024.
These scams involve scammers cultivating long-term relationships with victims, often through dating apps or social media, before convincing them to invest in fraudulent crypto schemes.
Chainalysis estimates that pig butchering scams alone accounted for 33% of total crypto fraud revenue in 2024, with deposits to these scams surging by 210% compared to the previous year.
However, the average deposit amount dropped by 55%, suggesting scammers are targeting a larger pool of victims for smaller, quicker payouts.
The infrastructure supporting these scams is increasingly sophisticated. Illicit marketplaces like Huione Guarantee, a Cambodian-based platform, have processed $70 billion in crypto transactions since 2021, offering services like money laundering, stolen data, and AI software.
In 2024, Huione’s scam technology vendors received at least $375.9 million in cryptocurrency, underscoring the scale of this ecosystem.
On May 29, 2025, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Funnull Technology Inc. and its administrator, Liu Lizhi, for facilitating pig butchering scams that defrauded U.S. victims of over $200 million.
Funnull, a Philippines-based firm, allegedly purchased bulk IP addresses from legitimate providers and resold them to cybercriminals, who used them to host fraudulent websites.
Chainalysis identified two crypto wallets linked to Funnull, which had direct exposure to Huione Pay, a subsidiary of the Huione Group flagged by FinCEN as a primary money laundering concern.
The FBI also issued an advisory, noting that Funnull’s infrastructure supported over 332,000 domains tied to crypto investment scams.
Chainalysis is countering these threats with its AI-powered tool, Alterya, which enhances scam detection and automates threat responses.
By combining blockchain analytics with off-chain intelligence, investigators can trace funds from scam wallets to exchanges or mixers, unmasking coordinated fraud networks.
Initiatives like Operation Spincaster, led by Chainalysis, have traced over $187 million in losses, showcasing the power of public-private collaboration.
However, as scammers continue to evolve, regulators, law enforcement, and the private sector must intensify efforts to disrupt these networks and protect the crypto ecosystem.