Crypto Scams Rise 81%, Carpet Costs Investors Over $ 7.7 Billion In 2021: Chainalysis

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2021 has emerged to be nothing less than a turbulent year for the cryptocurrency world. As the adoption of crypto became a thing of the past, scams in this nascent space also grabbed headlines throughout the year. In a recent report, research firm Chainalysis found that the scams have diverted more than $ 7.7 billion (roughly Rs. 58,697 crore) from investors this year. The most common form of scam was the classic carpet pull, where developers launch a scam project, recruit investors, and then abandon the project, escaping with the investors’ money.

In total, crypto scams are up 81% this year from 2020, due to the stack draws, the blockchain data platform said in a blog post.

Overall, the carpet draws have brought in more than $ 2.8 billion (roughly Rs. 21,333 crore) in cryptocurrency to victims this year.

“Carpet prints are most often seen in decentralized finance (DeFi). The developers end up draining the funds from the cash pool, sending the token value to zero and disappearing, ”the report said.

Carpet draws are prevalent in DeFi because with the right technical knowledge it is easy and inexpensive to create new tokens on the blockchain and list them on Decentralized Exchanges (DEX) without code auditing.

In November, for example, investors in a new cryptocurrency called “Squidgame Cash” or “SQUID” inspired by the Netflix Squid Games series were potentially “pulled” after the token crashed by 99.99%. overnight.

The crooks are said to have raised around $ 3.3 million (around Rs. 22 crore) with this project. The investigation into the case is still ongoing.

The number of crypto scams targeting individual crypto investors has declined in recent times, however. From around 10.7 million last year, the number of deposits to fraudulent addresses has fallen to 4.1 million.

“While total scam revenue increased significantly in 2021, it has remained stable if we remove carpet runs and limit our analysis to investment scams,” the report adds.

Chainalysis further pointed out that the money laundering strategies of crypto crooks have remained predictable. Most of the cryptocurrencies stolen in 2021 ended up on mainstream exchanges.

Earlier this month, the Bitmart crypto exchange lost $ 196 million (approximately Rs. 1,479 crore) in crypto assets in a hacking attack. According to a NewsRoomPost report, a decentralized exchange aggregator called “1inch” was used by hackers to trade stolen assets in exchange for Ether tokens.

“Scams represent a huge barrier to successful cryptocurrency adoption, and combating them cannot be left to law enforcement and regulators alone,” the report adds.

Total crypto crimes in 2020 are believed to be around $ 10.52 billion (around Rs. 79,194 crore).

The same report also pointed out that scams and frauds are a major problem that accounted for 67.8% of total cryptocurrency crimes in 2020.

Earlier in November, the U.S. Federal Bureau of Investigation said cyber crooks trick innocent people into using physical cryptocurrency ATMs and digital QR codes to conduct malicious transactions and trick them into their active.

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting Founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

Cryptocurrency is unregulated digital currency, not legal tender and subject to market risk. The information provided in the article is not intended to be and does not constitute financial advice, business advice or any other advice or recommendation of any kind offered or endorsed by NDTV. NDTV will not be liable for any loss resulting from any investment based on any perceived recommendation, forecast or any other information contained in the article.

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