October 24, 2022

The data centre of a crypto mining company in Kazakhstan. Photo: Reuters

As crypto assets gain popularity, crypto scams are also on the rise – over $7.7bn (£5.7bn) worth of cryptocurrency was stolen from victims worldwide in 2021, new data revealed.

Chainalysis, a blockchain data firm, said scams were the largest form of cryptocurrency-based crime by transaction volume and there has been an 81% rise in these when compared with 2020.

Chart: Chainalysis

Chart: Chainalysis

2020 saw scamming activity dropped significantly compared to 2019, in large part due to the absence of any large-scale Ponzi schemes.

But chat changed in 2021 with Finiko, a Ponzi scheme targeting Russian speakers throughout Eastern Europe, netting more than $1.1bn from victims. It invited users to invest with either bitcoin (BTC-USD) or tether, promising monthly returns of up to 30%.

Read more: Live crypto prices

Another change that contributed to 2021’s increase in scam revenue was the emergence of ‘rug pulls’.

These are particularly common in the DeFi ecosystem and includes developers of a cryptocurrency project — typically a new token — abandon it unexpectedly, taking users’ funds with them.

The biggest rug pull of the year centered on Thodex, a large Turkish centralised exchange whose CEO disappeared soon after the exchange halted users’ ability to withdraw funds. Users lost over $2bn worth of cryptocurrency

Another recent example of this was when a crypto currency inspired by the hugely popular South Korean Netflix…

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