Crypto scammers stole $14 billion in 2021

According to the new data from the analytics firm Chainalysis, in 2021, criminals in the cryptocurrency sphere “earned” a record $14 billion. The rise of the decentralized finance industry (DeFi) has heavily contributed to the growth of fraud level. Additionally, DeFi protocols are actively used by bad actors to money laundering.

Losses from crypto-related crimes increased by 79% compared to the previous year. Such a sharp jump resulted from the increase in the number of fraud and theft cases. The hacking of blockchain projects is the main reason for the theft of digital assets.

Chainalysis noted in its annual report that DeFi provides massive opportunities for both entrepreneurs and users of digital currencies. Though, decentralized finance will not be able to realize its full potential if it is in the widespread use in crypto scams. The decentralization is the main vulnerability of DeFi.

According to Kim Grauer, the head of research at Chainalysis, many DeFi protocols have vulnerabilities exploited by attackers. Last year, they accounted for more than 20% of the hacks.

The company analysts emphasized that the rise in legitimate cryptocurrency transactions is much higher than in illegal transactions. In 2021, the total volume of digital currency transactions amounted to almost $16 trillion – five times more than in 2020. Experts say that the law enforcement tools development and the growing transparency of blockchain technology help to tighten cryptocurrency criminal activities.

Most of the frauds related to digital currencies were recorded in Russia, the USA and Peru. Earlier, the US Federal Bureau of Investigation reported a growing number of Bitcoin ATMs fraud cases, and the Central Bank of the Russian Federation warned about a new type of cryptocurrency fraud. Besides, a high level of cryptocurrency crime is observed in Eastern European countries. At the end of the previous year, Indian police officers reported an increase in the number of crypto scammers and urged people to invest in digital assets only through high-profile firms.