A new research conducted by crypto and blockchain analytic firm, Chainalysis revealed that crypto investors lost over $7.7 billion to fraudsters, an 81% rise compared to last year. The alarming figure, however, is lower than the near $10 billion reported in 2019.
Chainalysis found that rug pulls – a tactic where fraudsters siphon deposited investor funds – has increased significantly since the turn of the year. Rug pulls claimed $2.8 billion out of the $7.7 billion this year. In other words, they accounted for 37% of lost investor capital, compared to just 1% last year.
On the bright side, financial watchdogs getting a better understanding of the crypto space has helped them come up with better ideas on how to investigate and punish crypto scammers. Chainalysis attributes this increase in regulatory knowledge as the reason for the reduction in crypto scam lifespan from 192 days last year to 70 in 2021.
Another key finding from the research is that the activities of fraudsters did not necessarily correspond with a surge in market growth as was the case last year. Instead, the bad actors continued to execute their operations through short-term bull and bear markets witnessed in 2021.
Lastly, the number of deposits to identified scam crypto addresses went down from 10.7 million last year to 4.1 million in 2021. These accounts are typically used to set up giveaway scams or other misleading campaigns targeting unsuspecting users. The lower number of deposits to these addresses suggests that there were a small number of individual scams and at the same time shows that the amount taken from each victim went up.
Chainalysis’s findings are not surprising, given that crypto fraud has been a permanent feature of crypto news reports this year. Early last month, Coinfomania reported that scammers pulled a rug on investors, stealing over $2.1 million. Per the report, the scammers listed Squid Game (SQUID), a memecoin created after the most watched Netflix TV show of all time, Squid Game to carry out their malicious act.
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