Total scams around cryptocurrencies declined from around $9 billion to under $2.7 billion in 2020
Scam is the highest-grossing form of cryptocurrency-based crime. However, total scam revenue for cryptocurrencies declined from around $9 billion to under $2.7 billion in 2020, as per Chainalysis crypto crime report. Interestingly, the report claimed that the number of individual payments to scam addresses rose from over 5 million to 7.3 million, suggesting a rise of over 48% in the number of individual scam victims.
Data from the report showed six ponzi schemes accounted for nearly $7 billion worth of cryptocurrency in 2019, which was more than double of what all scam categories made in 2020. To be noted that ponzi scheme PlusToken scam had accounted for around $3 billion worth of cryptocurrency, from its victims.
As per the report, in 2020, nearly all scam related revenues were directed towards small-scale investment scams. 2020’s biggest scam was done by the network marketing company Mirror Trading International (MTI). Presenting itself as a passive income source, it received $589 million worth of cryptocurrency across more than 470,000 transactions. It was using a cryptocurrency gambling service as a money laundering and cash out mechanism, which received $39 million worth of cryptocurrency from the scam in 2020. Additionally, an investigation revealed that the company had over 16,000 Bitcoin of claimed customer investment funds which were unaccounted for.
While phishing scams contributed a very small share of overall scam revenue in 2020, the Ledger phishing scam had a high number of potential victims. According to CoinTelegraph, Ledger users lost 1.1 million XRP within the first week of the phishing campaign. Stolen assets from the Ledger scam amounted to over 3 million in euro currency.
Insights from the report showed that scammers directed a large share of the cryptocurrency from victims towards exchanges and other services. Additionally, scam proceeds sent to mixers and high-risk exchanges, with weak compliance programs, saw a rise in share.
(With insights from the Chainalysis Crypto Crime Report, 2021)