Cryptocurrency scammers stole $7.7 billion worth of cryptocurrencies from victims in 2021. This is a 81% increase in losses compared to 2020.
According to Blockchain analysis firm Chainalysis, approximately $1.1 billion of the $7.7 billion were attributed to a single scheme which allegedly targeted two countries: Russia and Ukraine.
A primary source of rising cryptocurrency scams in 2021 were ‘rug pulls’. This is when the developers of a new cryptocurrency vanish and take supporters’ funds with them.
Rug pulls accounted for 37% of all cryptocurrency scams in 2021, at $2.8 billion.
“As the largest form of cryptocurrency-based crime and one uniquely targeted toward new users, scamming poses one of the biggest threats to cryptocurrency’s continued adoption.”Chainalysis Report
The report from Chainalysis also found that the number of active financial scams rose from 2,052 in 2020 to 3,300 in 2021.
It is worth mentioning that scams also went up in line with the rise in value of popular cryptocurrencies such as Ethereum and Bitcoin.
With all these scams happening in the crypto space, what is the recommendation of Chinalysis?
“The most important takeaway is to avoid new tokens that haven’t undergone a code audit. Code audits are a process through which a third-party firm analyses the code of the smart contract behind a new token or other DeFi project,” said the report.