Over the past year, cryptocurrencies have made a strong move into the financial mainstream. However, alongside the positives have come some negatives. Mainly, an increase in the volume of illicit activity “on chain,” or involving the use of cryptocurrencies.
But while illicit use of crypto may be on the rise, major exchanges such as Binance, are fighting back. On-chain illicit activity takes many forms, but as Binance discussed in a recent report, one type of illicit activity that has been of particular concern has been the use of crypto in organized scams, such as phishing attacks and “pig butchering” scams.
As discussed in a recent report issued by Binance, this leading cryptocurrency exchange has taken proactive steps to mitigate scam activity on its platform leading to over $9.1M in scammed funds successfully recovered and over $129M of funds prevented from being scammed annually. In addition, with the launch of the Binance Anti-Scam Refund Initiative, the company is also successfully recovering stolen funds for scam victims.
Binance CMO Rachel Conlan recently discussed the company’s focus on cyber security for its users and the industry at large, “The evolving nature of cyber threats in the crypto industry reinforces the need for exchanges and custodians to continuously strengthen their security frameworks. As threats continue to grow in sophistication, so must our defenses.”
Conlan continued, “In parallel, maintaining a 1:1 reserve is equally essential to ensure transparency and safeguard user assets. Binance was one of the first major exchanges to adopt Merkle tree-based Proof of Reserves, allowing users to independently verify their holdings. This commitment to transparency reflects the industry's broader dedication to both asset security and full accountability, giving users an added layer of confidence.”
Other Types of Crypto Crime Declining, but Scam Activity Still Rising
Back in January, blockchain analytics firm Chainalysis published a white paper on 2025 Crypto Crime trends. This white paper contains numerous insights about present levels of on-chain illicit activity.
For instance, even as crypto crime represented only 0.14% of on-chain translation volumes, this very small percentage still represented tens of billions of dollars worth of illicit transactions. Per Chianalysis, nearly $41 billion was received by known illicit addresses during 2024. Adding in estimated unknown illicit addresses, the actual volume of criminal transactions on-chain could be closer to $51 billion.
Fortunately, various types of crypto crime are on the decline. These include longstanding criminal activities involving the use of crypto as payment, such as ransomware, darknet market sales, as well as scam shops. Last year, darknet market sales fell by around 13%, with fraud shop volumes declining by more than 50%.
Unfortunately, while these activities are becoming less lucrative for criminals, the same can’t be said about scams involving the theft of cryptocurrency assets. According to the aforementioned white paper, stolen funds, whether stolen via phishing or more sophisticated hacking tactics, came in at $2.2 billion during 2024, rising 21% compared to the prior year. Scam activity, such as pig butchering, high-yield investment scams, as well as activities like sextortion, also remained at all time highs.
Taking a Bite out of Crypto Crime
When it comes to cybercrime like ransomware, efforts like intensified law enforcement response have been effective in both reducing their incidence, as well as disincentivizing criminals from engaging in this activity, given the dwindling risk/reward proposition.
Admittedly, taking a bite out of crypto crime has been more of a challenge. In countries as disparate as Nigeria and Myanmar, local law enforcement has successfully shut down crypto scam centers. Yet while these forced shutdowns have had numerous positives, including the liberation of scam workers who are often the victims of human trafficking, scam center operators continue to relocate to jurisdictions where their activities can persist undetected.
That’s where the efforts of the cryptocurrency industry come in, to reduce crypto crime, and, in some cases, help recover stolen funds. Binance has been highly active in both activities. As discussed previously, the company has implemented its own Anti-Scam Refund Initiative.
Through proactive measures, safety mechanisms to thwart suspicious activity, as well as measures to help respond to scam incidents, reach out to scam victims, and attempt to recover stolen funds, this program resulted in 800 successful recoveries in 2024, with recovered funds totaling $9.1 million. The Initiative also blacklisted 47,000 malicious addresses and sent out 30,000 proactive calls to potential victims.
Bottom Line
Much like crime “off-chain,” there will never be a moment where there is absolutely zero illicit activity occurring within the blockchain ecosystem. However, on-chain illicit activity continues to represent an extremely small portion of overall on-chain transaction volumes.
Better yet, efforts by both law enforcement and the cryptocurrency industry have so far been successful at reducing major illicit crypto activity. Although scam-related illicit crypto activity remains a persistent issue, despite increased law enforcement and industry efforts, there is something else that can help the public fight back: increased education.
Headlines regarding “pig butchering,” especially about how individuals of all ages and all walks of life can fall prey to these scams, have helped to increase awareness. The continued raising of awareness, whether through governmental warnings, warnings from cryptocurrency exchanges to their customers, or from media headlines, could help further reduce scam activity prevalence.
(The views, opinions, and claims in this article are solely those of the author’s and do not represent the editorial stance of The Assam Tribune)