2021 saw cryptocurrency based scams record over $7.7 billion worth of cryptocurrency taken from victims worldwide, as per the Chainalysis Crypto Crime report 2022. As per the report, the amount represented an 81% increase in crypto scams compared to 2020.
Insights from the report stated that a new type of scam called rug pulls, in which the developers of a new crypto project, typically a new token, would abandon it unexpectedly by stealing all invested funds, increased 2021’s scam revenue count. Moreover, rug pull scams accounted for 37% of all cryptocurrency scam revenue in 2021, compared to 1% in 2020. Overall, rug pulls scammed its victims of $2.8 billion worth of cryptocurrency. Turkish centralised exchange Thodex accounted for the biggest rug pull of the year by scamming its users over $2 billion worth of cryptocurrency, and represented 90% of all value stolen in rug pulls. The second biggest rug pull of 2021 was done by KuCoin Community Chain (KCC) based protocol AnubisDAO which scammed over $58 million worth of cryptocurrency, by raising nearly $60 million from investors.
Ponzi scheme Finiko scammed more than $1.1 billion worth of cryptocurrency targeting Russian speakers throughout Eastern Europe. While total scam revenue increased in 2021, the number of deposits to scam addresses fell from under 10.7 million to 4.1 million. The number of financial scams increased from 2,052 in 2020 to 3,300 in 2021. Finiko sent most of its more than $1.5 billion worth of cryptocurrency to mainstream exchanges, high-risk exchanges, a hosted wallet service, and a P2P exchange. It also sent $34 million to a DeFi protocol designed for cross-chain transactions via a series of intermediary wallets.
The report’s data stated that the average financial scam was active for just 70 in 2021, compared to 192 in 2020. A trend of investigators getting better at investigating and prosecuting scams was seen when the Commodity Futures Trading Commission (CFTC) filed charges against 14 investment scams in September 2021. The moving 30-day average daily transaction volume of transfers to scams fell 88% from $730,000 in September 2020 to $90,000 by November 2021.
(With insights from the Chainalysis Crypto Crime Report, 2022)