Scammers Stole USD 7.7B in Crypto in 2021 Amid Rug Pull Surge - Chainalysis
Scams continue to generate the largest stream of cryptocurrency-based crime by transaction volume, with more than USD 7.7bn worth of crypto stolen from victims across the world so far this year, according to a recent report by blockchain analysis company Chainalysis.
Sadly, the figure represents an 81% increase compared to 2020 - a year in which scamming activity reported a significant drop compared to 2019, largely due to the absence of any major Ponzi schemes, the company said.
“That changed in 2021 with Finiko, a Ponzi scheme primarily targeting Russian speakers throughout Eastern Europe, netting more than [USD] 1.1 billion from victims,” according to Chainalysis.
Another change that could be used to explain the 2021 surge in scam revenue is the emergence of rug pulls, a relatively new type of crypto-related scam that is particularly common in the decentralized finance (DeFi) ecosystem. Under this scheme, developers of a cryptocurrency project abandon it unexpectedly, taking over the users’ funds.
“While total scam revenue increased significantly in 2021, it stayed flat if we remove rug pulls and limit our analysis to investment scams — even with the emergence of Finiko," Chainalysis said.
At the same time, they add, the number of deposits to scam addresses dropped from just under 10.7m to 4.1m, "which we can assume means there were fewer individual scam victims."
The report states that the number of financial scams active - meaning their addresses were receiving funds at any point during 2021 - also increased significantly this year, expanding from 2,052 in 2020 to 3,300.
“This goes hand in hand with another trend we’ve observed over the last few years: The average lifespan of a financial scam is getting shorter and shorter,” according to Chainalysis. “The average financial scam was active for just 70 days in 2021, down from 192 in 2020.”
At the same time, the latest data indicates the end of a long-standing statistical relationship between crypto asset prices and scamming activity, as in the past price spikes were often bringing influxes of new crypto users.
“New, less savvy users attracted by cryptocurrency’s growth are more likely to fall for scams than more seasoned users. However, the relationship between asset prices and scamming activity now appears to be disappearing,” the report concludes.
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