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Cryptocurrency Scams Steal $7.7bn as Losses Hit New Record

Cryptocurrency scams are an all-time high, according to new data released on Friday, with illegal operations making off with more than $7.7 billion worth of assets, 81% more than in 2020.

Genesis Block ceases trading
Genesis Block has no connection with a separate crypto player called Genesis Global Capital.


Cryptocurrency scams are at an all-time high, according to new data released on Friday, with illegal operations making off with more than $7.7 billion worth of assets, 81% more than in 2020.

Scams were once again the largest form of cryptocurrency-based crime by transaction volume, according to a study by Chainalysis, the blockchain data platform.

Cryptocurrency scams are becoming more sophisticated, with this year seeing the emergence of so-called “rug pulls” in which developers of a cryptocurrency project – typically a new token – abandon it unexpectedly, taking users’ funds with them.

“When it comes to the dangers of cryptocurrency, there are appreciable and accepted risks and those that are more abstract and thereby unexpected,” John Kicklighter, chief strategist at the DailyFX foreign exchange news platform, said.

“While the sudden and total loss of control over a wallet is infuriating and disturbing to say the least, the number of people effected by the crime is fairly small relative to the scale of activity in the crypto space and its associated sites,” he added.


Traditional Speculative Market Fuels Cryptocurrency Scams

Kicklighter said a more worrying issue is not criminality but volatility, adding that the greater risk to and from crypto is more aligned to what the Bank of England and numerous other policy authorities have raised over the past few years.

“The sheer amount of capital that has moved into the unregulated and decentralised space has drawn in even more interest from the traditional financial markets – both individual and institutional investor interests,” Kicklighter said.

“This imbues the market with more of the qualities of a traditional speculative environment. That means, should traditional markets like the US indices start to capsize, it is likely to tear down these more disruptive markets as well.”

Chainalysis says centralised exchanges are the most popular cryptocurrency services, especially for new users.

“Exchanges are in the perfect position to fight back against scams and instil more trust in cryptocurrency by warning users or even preventing them from executing those transactions,” the platform said.

Chainalysis said it was working with Luno – a leading cryptocurrency exchange with a heavy presence in South Africa – to educate users on how to spot red flags that indicate an investment opportunity is likely to be a scam.


  • George Russell




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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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