Since gullible retail investors left the market plagued by falling asset prices, the number of crypto scams fell by 65%. However, DeFi applications give hackers new opportunities
Fewer people have fallen victim to cryptocurrency scams in 2022 so far, according to a recent report by Chainalysis. Falling asset prices and the exit of inexperienced crypto users from the market led to a 65% total crypto scam revenue decline from the prior year’s period. During H1 2022, scammers stole about $1.6 billion in crypto, which appears linked to the declining prices of cryptocurrencies.
Moreover, the cumulative number of individual transfers to scammers is the lowest during the past four years. One possible explanation is that the bear market doesn’t attract new, inexperienced crypto users, who are more likely to fall victim to scams.
The largest scam of 2022 so far has only netted $273 million and is related to the cannabis investing platform JuicyFields.io. It has reportedly locked investors out of their accounts on its cannabis-focused “e-growing” service.
Nevertheless, the analysis of specific forms of cryptocurrency-based crime reveals that some scam types have actually increased in 2022. For instance, $1.9 billion worth of crypto has been stolen in hacks of services, compared to just under $1.2 billion at the same point in 2021. Much of this can be attributed to an astonishing rise in funds stolen from DeFi protocols.
Moreover, we shouldn’t expect theft to drop, based on cryptocurrency market movements, similar to scamming. As long as crypto assets held in DeFi protocol pools and other services have value and are vulnerable, bad actors will try to steal them.
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