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Crypto Assets Worth $7.7 billion Lost Globally Says Chainalysis Report Preview

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  • Chainalysis released a preview of its Crypto Crime Report of 2022, according to whose data, the primary form of crypto-currency-based crime by transaction volume is still the crypto scams.
  • At a time, the number of crypto assets is increasing. Nonetheless, the scam duration is declining. As defined by the Chainalysis report, an active crime is where the crypto addresses of the “black hats” get funds.
  • There is a significant jump of 40% in the number of active cases in less than a year from 2,052 in 2020 to 3,300. The scams appear in waves corresponding with the sustained price growth in top cryptocurrencies like Ethereum and Bitcoin, which leads to influxes of new users.

In a preview of its 2022 Crypto Crime Report, which is due in February, Chainalysis gives us a peek into its data. According to this, scams are still the primary form of cryptocurrency-based crime by transaction volume.

Due to volume, over $7.7 billion worth of crypto assets has been stolen from users globally. Moreover, this $7.7 billion represents a rise of 81% compared to 2020, the year in which the scamming activity dropped notably compared to 2019.

The rise of rug pulls contributed to the increase in Scam Revenue of 2021. However, this kind of fraud is comparatively new and is the most common in DeFi (Decentralised Finance). 

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A developer creates a DeFi project or a cryptocurrency and invites investors into it. When enough funds are allocated to the project by investors, a corrupt developer drops out and abandons the project. This is called “rug pull” since metaphorically, the crooked developer “pulls the rug” out from under investors. The research also indicated that crypto fraudsters are continuously evolving their tactics.

Nonetheless, the average lifespan of a financial scam is decreasing day by day. In 2021, the average scam was only active for 70 days, a significant decrease from 192 in 2020. 

Looking further back, the average cryptocurrency scam lasted for 2,369 days in 2013. The numbers, however, have only gone drastically down since 2013. This could be because the investors are getting better at solving and prosecuting scams. Since fraudsters are also aware of that, they try to close up shop before attracting the attention of regulators and law enforcement.

The number of crypto crooks is growing at a time. However, the duration of scams is on the decline. As per the Chainalysis report, an active crime is where the crypto addresses of the “black hats” receive funds.

This year, the number of active scams reached 3,300, taking a jump of 40% in less than a year from 2,052 to 2020.

At last, the scams generally arrive in waves in correspondence to sustained price growth in top crypto assets such as Bitcoin and Ethereum, which leads to influxes of new users.

It is pretty evident that hack attacks and crypto crime are the most significant barriers coming in the way of successful digital currency adoption, and to fight them can’t be only left to regulators and law enforcement. Cryptocurrency businesses, crypto exchanges, financial institutions, and the media play a significant role in educating and informing about investments and education. Yet the investors should also take responsibility for their investments actions and crypto education, or else the investment they make won’t be theirs for too long.

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