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Cryptocurrency scams jump 81% in 2021

Published January 04, 2022 - 4 mins reading time
Individuals Startup/innovation

According to the latest report from blockchain analytics firm Chainalysis, cryptocurrency scams surged in 2021. The amounts scammed increased by 81% in one year on a global scale.

81% increase in amounts swindled in one year

The 2021 edition of Chainalysis' "The 2021 Crypto Crime Report " is particularly worrying. In one year, the amounts defrauded in cryptocurrencies total $7.7 billion worldwide, an increase of 81%.

According to Chainalysis' observations, while the number of scams has decreased, the amounts stolen in each scam have increased. This finding is shared by blockchain data analysis company Elliptic, which has estimated a 600% increase in cryptocurrency losses due to scams or theft between 2020 and 2021.

While the number of scams used to rise when cryptocurrency prices soared, as in 2017 and 2020, with crooks on the lookout for novice investors, the two phenomena are no longer linked.

Scams today are shorter in duration, for larger amounts stolen. In 2020, suspect companies harvested investors' cryptocurrencies for an average of 6 months before disappearing with their loot, compared with 2 months in 2021.

Cryptocurrency: scammers target novice investors

In particular, the Chainalysis report refers to the Finiko Ponzi scheme, which targeted Russian-speaking investors throughout Eastern Europe, stealing a total of $1.1 billion over the past year.

Platforms that allow individuals to exchange cryptocurrencies without intermediaries, such as Uniswap, are also being targeted by scammers, who slip through certain security loopholes.

While the amounts stolen via decentralized platforms were minimal in 2020, they represented $2.8 billion in 2021, or more than a third of all the sums swindled in the year.

Tokens are sometimes listed on these platforms without prior auditing of their code, resulting in around 20 scams in 2021. In the end, investors who bought these tokens with cryptocurrencies like ether end up with assets that can't be used anywhere and are therefore worthless. By the time they realize this, the scammers have long since gone off the deep end.

Many scams capitalize on a trend to attract more investors. This was the case this year with the Squid Game series, very popular on Netflix, which gave crooks the idea of launching a cryptocurrency of the same name.

The site highlighted partnerships with Microsoft and Netflix, and even boasted the support of Elon Musk himself. The "Squid Game" share price reached $2,800 in just a few days, before losing all value when its creators disappeared with the money.

 

Scammers attract a large proportion of their investors, who are young and often inexperienced in this field, via social networks such as TikTok, Snapchat or Instagram, sometimes relying on influencers. In 2022, the DGCCRF has decided to focus on the fight against " unfair influencer marketing practices ".