Reported by Sindhu V Kashyap

According to Chainalysis’s mid-year crime update report, while illicit on-chain activities have declined by 20 percent year-to-date (YTD), certain criminal operations have increased significantly.

For instance, inflows from stolen funds have nearly doubled, and ransomware payments are on track to reach record levels by the end of the year. These trends highlight the adaptive strategies employed by cybercriminals to continue their operations despite increased scrutiny and regulatory efforts.

A substantial portion of the report focuses on the alarming rise of “romance-based” scams, which have become one of the most lucrative forms of financial exploitation involving cryptocurrency. Romance-based scams are particularly malicious and consist of building a fake relationship, often under the guise of romance, to gain the victim’s trust over time.

The scam is named “romance-based scams” because scammers metaphorically “fatten up” their victims with attention and affection before “butchering” them by persuading them to invest in fraudulent schemes. These scams are often prolonged, with scammers meticulously developing a rapport with their targets before executing the final act of financial theft.

“Romance-based scams have emerged as the most significant revenue-generating scam type this year primarily because scammers are highly adaptable and continuously evolve their methods based on what proves to be effective. Despite increased media coverage and public awareness about romance based scams, they remain prevalent because they are difficult to detect and trace back to specific perpetrators,” says Eric Jardine, Cybercrimes research Lead, Chainalysis.

He explains these scams exploit interpersonal relationships, making them diffuse and less predictable forms of fraud.

“Unlike traditional scams, such as Ponzi schemes that rely on larger, centralised operations, romance based scams involves direct, targeted interaction with individuals. This tactic often includes leveraging social relationships—whether romantic, platonic, or professional—to build trust and elicit significant financial commitments from the victims. Because these scams operate on a more personal and individualised level, they can be more challenging to uncover, allowing scammers to generate substantial revenue without drawing immediate attention to their activities,” adds Jardine.

What is particularly concerning about romance based scams is the scale and organisation of these operations, which are frequently run from Southeast Asian compounds. The report reveals that many of these scams are operated by trafficked individuals who are forced to work under inhumane conditions in scam compounds.

These operations are not only a source of significant financial gain for the criminals behind them but also a stark example of modern slavery. The report highlights the operations of Myanmar’s KK Park, one of the most notorious scam compounds, which has generated over $100 million in revenue this year alone.

The funds flowing into this compound come not only from the victims of scams but also from ransom payments made by families trying to rescue their trafficked relatives.

Read full report: https://www.edgemiddleeast.com/security/inside-the-rise-of-romance-based-scams-how-cybercriminals-are-exploiting-romance-and-trust