https://blog.chainalysis.com/reports/2021-crypto-scam-revenues/
This blog is a preview of our 2022 Crypto Crime Report. Sign up here to reserve your copy and we’ll email you the full report when it comes out in February!
Scams were once again the largest form of cryptocurrency-based crime by transaction volume, with over $7.7 billion worth of cryptocurrency taken from victims worldwide.
That represents a rise of 81% compared to 2020, a year in which scamming activity dropped significantly compared to 2019, in large part due to the absence of any large-scale Ponzi schemes. That changed in 2021 with Finiko, a Ponzi scheme primarily targeting Russian speakers throughout Eastern Europe, netting more than $1.1 billion from victims.
Another change that contributed to 2021’s increase in scam revenue: the emergence of rug pulls, a relatively new scam type particularly common in the DeFi ecosystem, in which the developers of a cryptocurrency project — typically a new token — abandon it unexpectedly, taking users’ funds with them. We’ll look at both rug pulls and the Finiko Ponzi scheme in more detail later in the report.
As the largest form of cryptocurrency-based crime and one uniquely targeted toward new users, scamming poses one of the biggest threats to cryptocurrency’s continued adoption. But as we’ll explore, some cryptocurrency businesses are taking innovative steps to leverage blockchain data to protect their users and nip scams in the bud before potential victims make deposits.
While total scam revenue increased significantly in 2021, it stayed flat if we remove rug pulls and limit our analysis to investment scams — even with the emergence of Finiko. At the same time though, the number of deposits to scam addresses fell from just under 10.7 million to 4.1 million, which we can assume means there were fewer individual scam victims.
This also tells us that the average amount taken from each victim increased.
Scammers’ money laundering strategies, however, haven’t changed all that much. As was the case in previous years, most cryptocurrency sent from scam addresses ended up at mainstream exchanges.
Exchanges using Chainalysis KYT for transaction monitoring can see this activity in real time, and take action to prevent scammers from cashing out.
The number of financial scams active at any point in the year — active meaning their addresses were receiving funds — also rose significantly in 2021, from 2,052 in 2020 to 3,300.
This goes hand in hand with another trend we’ve observed over the last few years: The average lifespan of a financial scam is getting shorter and shorter.
