Crypto asset fraud and theft during 2021 is expected to break the USD 7.7 billion mark, an 81% increase over 2020.
The analysis comes from Chainalysis, a blockchain analytics company, which also says that $1.1 billion of the total fraud took place in one large fraud scheme allegedly targeting Russia and Ukraine.
"As the largest form of crime and targeting new users, fraud is the biggest threat to cryptocurrency adoption," Chainalysis wrote in its report.
In the same period, the number of deposits made to fraudulent addresses decreased dramatically compared to 2020. That is from 10.7 million to 4.1 million times, which means that fewer individuals are victims of fraud, but the amount of fraud is getting bigger.
The biggest fraud mode involving cryptocurrencies in 2021 is 'rug pulls', which is where a new cryptocurrency maker suddenly disappears and steals funds from people who have already donated money to it.
There are 37% of the total nominal cryptocurrency fraud using this 'rug pulls' scheme during 2021, with the amount reaching USD 2.8 billion, up 1% compared to 2020, as quoted by us from Zdnet, Tuesday (12/21/2021) .
“These rug pulls are common in DeFi because with the right technical knowledge, it is very easy and cheap to create a new token on the Ethereum blockchain or otherwise, as well as get it listed on a decentralized exchange without requiring an audit,” they added.
The characteristics of investment fraud networks have changed. According to Chainalysis, they found an increase in the number of financial frauds from 2,052 in 2020 to 3,300 in 2021, but the lifespan of these scams was reduced from 500 days in 2016, to 291 days in 2020, and only 70 days in 2021.
"Before, this kind of fraud could last longer. It seems that the fraudsters are starting to realize and feel the pressure from the authorities so that they hastily stop the fraud before the authorities find out," explained Chainalysis.