May 26, 2022

(Kitco News) Volatility and trust issues bedevil the crypto space, which saw more than $7.7 billion stolen worldwide in scams, according to a report published by blockchain analytics firm Chainalysis.

“Scams were once again the largest form of cryptocurrency-based crime by transaction volume, with over $7.7 billion worth of cryptocurrency taken from victims worldwide,” Chainalysis said in the report

This was 81% higher than last year’s total. However, the figure was still below 2019’s number of around $9 billion.

“That represents a rise of 81% compared to 2020, a year in which scamming activity dropped significantly compared to 2019, in large part due to the absence of any large-scale Ponzi schemes. That changed in 2021 with Finiko, a Ponzi scheme primarily targeting Russian speakers throughout Eastern Europe, netting more than $1.1 billion from victims,” the report noted.

‘Rug pulls’ were identified as the most popular scams in 2021. These are common within the DeFi space and are described when developers abandon projects after taking investors’ funds, Chainalysis said.

“Rug pull generally refer[s] to cases in which developers build out what appear to be legitimate cryptocurrency projects — meaning they do more than simply set up wallets to receive cryptocurrency for, say, fraudulent investing opportunities — before taking investors’ money and disappearing,” the report described.

This type of scam accounted for 37% or $2.8 billion of the…

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