Cybercriminals are now taking advantage of the ongoing craze around cryptocurrencies to trick potential victims and steal their digital money. In a recent report, research firm Chainalysis revealed that scammers mooched off over $14 billion worth of cryptocurrency from victims in 2021 —up by 79 per cent from $7.8 billion in 2020.
As of early 2022, Chainalysis said illicit address already hold over $10 billion worth of cryptocurrencies, with the majority of this held by wallets associated with cryptocurrency theft.
It should be noted that the rise in decentralized finance (DeFi) which facilitates crypto-denominated lending outside traditional banking, has been a big factor in the increase in stolen funds and scams. The firm says hackers have targeted DeFis the most, in yet another warning for those dabbling in this emerging segment of the crypto industry.
DeFi transaction volume spiked to 912 per cent in 2021, according to Chainalysis stats. “DeFi is one of the most exciting areas of the wider cryptocurrency ecosystem, presenting huge opportunities to entrepreneurs and cryptocurrency users alike,” Chainalysis wrote in its annual Crypto Crime report. “But DeFi is unlikely to realize its full potential if the same decentralization that makes it so dynamic also allows for widespread scamming and theft.”
In another report in December, Chainalysis revealed that at least 36 per cent of the victims lost over $2.8 billion (Rs 280 crores approx.) to ‘rug pull’ cases. A rug pull is a malicious maneuver in the cryptocurrency industry where crypto developers abandon a project and run away with investors’ funds. In total, crypto scams rose by 81 percent this year from 2020 led by rug pulls, the company said in a blog post.
It should be noted that in 2020, rug pulls accounted for just 1 per cent of the under $5 billion in total illicit revenue.
Earlier, in November, millions of dollars vanished in a matter of minutes after investors piled into a new cryptocurrency inspired by “Squid Game,” the popular Netflix survival series, only to watch its value plunge to nearly zero in a few short hours. Then Squid went on a roller-coaster ride. In a 10-minute span later on Monday, the token’s value grew from $628.33 to $2,856.65, according to CoinMarketCap, a crypto data tracking website. Then, five minutes later, it traded at $0.0007.
Meanwhile, US Federal Bureau of Investigation (FBI) had issued a warning in November, against cybercriminals that are using Bitcoin ATMs and QR codes to defraud unsuspecting individuals.
