The surge has been fueled by a rise in so-called "rug pulls" — predominantly found in the world of decentralized finance.
It's been another blockbuster year for crypto scams, according to new figures released by Chainalysis.
More than $7.7 billion in cryptocurrencies has been taken from victims in 2021 — that's an 81% increase compared with the year before.
The surge has been fueled by a rise in so-called "rug pulls" — predominantly found in the world of decentralized finance — where the founders of a project "abandon it unexpectedly, taking users' funds with them."
Chainalysis says another big factor in 2021's numbers is the existence of Finiko — a Ponzi scheme that swindled $1.1 billion by targeting Russian speakers in Eastern Europe.
Although scams remain "one of the biggest threats to cryptocurrency's continued adoption," the blockchain intelligence firm suggests that there are reasons to be optimistic — with a number of businesses using data to "protect their users and nip scams in the bud before potential victims make deposits."
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Diving into the Numbers
The statistics in the report are somewhat bittersweet.
The number of deposits to scam addresses has fallen to 4.1 million — less than half the 10.7 million seen in 2020. This indicates that fewer individuals have been caught up in scams this year.
Although this in and of itself is good news, it does mean that the average amount taken from each victim has risen substantially.
A staggering 3,300 financial scams were active in 2021, meaning that their addresses were continuing to receive funds. By contrast, this figure stood at just 2,052 in 2020.
And another interesting factoid lies in how the average financial scam is now active for just 70 days — a sign that law enforcement agencies "are getting better and investigating and prosecuting scams."
Rug pulls represented just 1% of the funds lost to scammers in 2020, but now account for 37% of revenue in 2021 — a cool $2.8 billion. Chainalysis said:
"DeFi is one of the most exciting, innovative areas of the cryptocurrency ecosystem, and there are clearly big opportunities for early adopters. But the newness of the space and relative inexperience of many investors provides a prime landscape for scamming opportunities by bad actors. It'll be difficult for DeFi's growth to continue if potential new users don't feel they can trust new projects, so it's important that trusted information sources in cryptocurrency — whether they're influencers, media outlets, or project participants — help new users understand how to spot shady projects to avoid."
