Scams are the “biggest threat” to encryption adoption. Analysis company Chainalysis reaches this conclusion in a new report
Published in February of each year Chainalysis a report on the current crime situation in the crypto space. Although you have to trust the complete Crypto Crime Report 2022 Be patient, but an initial preview has already been made available by the US analytics company. Chainalysis primarily focused on fraud.
Overall, the number of scams in 2021 increased by 81 percent compared to the previous year. A total of US $ 7.7 billion was stolen in fraud cases. However, the record year 2019 remained intact. However, the US company sees illegal activities as the “biggest threat to crypto adoption.”
Analysts justify the increase with a significant increase in so-called “carpet pulls”, a scam that is widespread mainly in the DeFi space. The projects collect funds from their victims via tokens and then simply disappear from the scene. According to Chainalysis, these types of scams increased 37 percent ($ 2.8 billion) this year.
Crypto enthusiasts are likely to be particularly interested in the case Thodex remember. The Turkish crypto exchange surprisingly shut down in late April. Since then, the authorities have arrested numerous employees. The CEO disappeared and has been on the run ever since. Chainalysis estimates that the fraud case alone accounts for about 90 percent of the volume of carpet pulls with a loss of $ 2.6 billion.
Scams have a shorter duration
If you subtract the ratio of carpet pulls, the total volume has only increased slightly compared to 2020, says Chainalysis. If you look at classic investment fraud in the crypto space, the number of deposits dropped from 10.7 to 4.1 million. The analytics company assumes that although there have been fewer individual victims, the average amount of damage has increased. Chainalysis also found that much of the money from investment scams ended up ending up on major mainstream crypto exchanges.
However, the duration of these scams reached a new low in 2021. Therefore, the average “useful life” was only 70 days. Chainalysis attributes this development to better law enforcement and encryption security companies trying to root out scams. Therefore, scammers are under increased pressure, which is why funds are collected more quickly.
While this year’s Chainalysis report deals with fraud in the crypto space, the American company examined the proportion of illegal crypto transactions, for example for money laundering or terrorist financing, in the previous report. Compared to the share of all transactions, only 0.34 percent of the transfers were criminal in nature.