People’s interest in cryptocurrency has skyrocketed this year, with more than 15,000 digital currencies publicly traded among professionals and crypto investors. However, this popularity has also motivated cybercriminals, who managed to steal approximately 7.7 billion worth of cryptocurrency in 2021.
According to a preview of Chainalysis’s 2022 Crypto Crime Report, financial losses increased 81% from 2020, with a single scam that targeted users in the Ukraine and Russia costing victims $1.1 billion.
“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,” the company said. “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.”
Despite the sharp increase in scam revenues, researchers state that rug-pull scams were the main source of cryptocurrency losses. Rug pulls are a new type of scam observed in the decentralized finance ecosystems, where developers of a cryptocurrency abandon a project and run away with investors' funds.
“Rug pulls have emerged as the go-to scam of the DeFi ecosystem, accounting for 37% of all cryptocurrency scam revenue in 2021, versus just 1% in 2020,” Chainalysis added.“All in all, rug pulls took in more than $2.8 billion worth of cryptocurrency from victims in 2021. “
Five tips to help you avoid crypto investment scams:
· Too-good-to-be-true investments with guaranteed returns – scammers make false promises and guarantee high returns alongside special early prices for new emerging cryptocurrencies
· Crypto scammers contact you out of the blue via phone calls, text messages, emails, or social media and use pressure tactics to manipulate you into investing
· The fraudsters ask you not to promote their investment opportunity to others
· Be wary of cryptocurrency giveaways on social media platforms, especially if they appear to be sponsored by celebrities
· Be suspicious of individuals on dating websites who give you tips on crypto investments or ask you to invest with them