Crypto scams: $ 7.7 billion stolen in 2021 – report

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(Kitco News) Volatility and confidence issues plague the crypto space, which has seen more than $ 7.7 billion stolen from around the world in the form of scams, according to a report released by the blockchain analytics firm Chainalysis.

“Scams were once again the largest form of cryptocurrency-based crime in terms of transaction volume, with over $ 7.7 billion in cryptocurrency taken from victims globally,” said Chainalysis in the report.

This was 81% more than last year’s total. However, the figure was still lower than the 2019 figure by around $ 9 billion.

“This represents an 81% increase from 2020, a year in which scam activity has declined significantly from 2019, largely due to the lack of large-scale Ponzi schemes. That changed in 2021 with Finiko, a Ponzi scheme primarily targeting Russian speakers across Eastern Europe, bringing in more than $ 1.1 billion to victims, ”the report notes.

“Carpet draws” have been identified as the most popular scams in 2021. These are common in the DeFi space and are described when developers abandon projects after taking funds from investors, Chainalysis said.

“Carpet pull-ups generally refer to[s] to cases where developers are building what appear to be legitimate cryptocurrency projects – meaning they are doing more than just setting up wallets to receive cryptocurrency for, for example, fraudulent investment opportunities – before taking investor money and disappearing, ”the report describes.

This type of scam accounted for 37% or $ 2.8 billion of the overall total this year. Last year, this type of crime represented only 1%.

“Carpet prints have become the go-to scam in the DeFi ecosystem,” the report says. “The scam is one of the biggest threats to the continued adoption of cryptocurrency.”

Another billion dollar scam this year was the Finiko Ponzi scheme. This scheme operated from December 2019 to July 2021.

“Finiko urged users to invest with Bitcoin or Tether, promising monthly returns of up to 30%, and eventually launched their own coin which traded on multiple exchanges,” the report says. “In the roughly 19 months that it has been active, Finiko has received over $ 1.5 billion worth of Bitcoin in over 800,000 separate deposits… Finiko represents massive fraud perpetrated against cryptocurrency users from Eastern Europe, mainly in Russia and Ukraine.

Scams are one of the biggest barriers to crypto adoption, which is why all players must contribute, Chainalysis concluded. “Fight [crypto scams] cannot be left to law enforcement and regulators alone. Cryptocurrency companies, financial institutions, and of course, Chainalysis also have an important role to play. “

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