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Illicit cryptocurrency inflows from Japanese exchanges have declined in 2024, with eth scams seeing a 69% decline, data shows.
crypto fraud and scam activity linked to Japanese crypto exchanges decreased significantly in the first half of 2024, according to <a target="_blank" href="https://www.chainalysis.com/blog/crypto-money-laundering-japan/” target=”_blank” rel=”nofollow”>data from blockchain analysis firm Chainalysis. Reported entries to groups identified as scams saw a 69% decline in ethereum (eth) and a nearly 50% drop in bitcoin (btc) compared to 2023 figures.
In 2023, Japanese exchanges facilitated inflows of $44.6 million in eth and $11 million in btc linked to scams. However, eth-related scam inflows fell to $13.7 million, while btc fell to $5.7 million in the first six months of 2024, data shows. Fraudulent activity unrelated to crypto-native scams, including non-crypto-native fraud, also showed a decline, Chainalysis notes, with eth inflows falling to a face value of $1,171 and btc fraud-related inflows halving to $18.8 million.
The report highlighted the evolution of laundering techniques, including the use of consolidation wallets and decentralized exchanges to convert eth into stablecoins such as Tether (USDT).
“Given the rapid pace at which money launderers are using new wallet addresses, it is not easy to track them all individually in real time, but we can still identify common consolidation points from clusters we have identified to estimate the magnitude of these illicit activities. “
Chain analysis
Sophisticated actors continually adapt to evade detection, leveraging new wallet addresses and cross-chain tools, Chainalysis said, emphasizing the importance of proactive measures to counter these strategies.
However, the decline in cryptocurrency scams comes amid growing concerns about vulnerabilities in digital payment systems beyond cryptocurrencies. Recent fraud cases involving municipal digital currencies in Japan have attracted attention.
In one case, Osaka police arrested seven people for exploiting Toyonaka City's regional currency, “machikane points,” using stolen credit card information to obtain fraudulent premium rewards.
Nationally, several municipalities have reported fraud related to digital currencies, highlighting the risks associated with their rapid adoption. More than 219 municipalities issued regional digital currencies in 2023, up from 32 in 2019, but experts warn that these systems are increasingly the target of phishing groups.
