Crypto Scams Siphon over $381 million Year to date

Chainalysis reports that over $381 million have been lost by victims to crypto scams in 2020

By · Jul 24, 2020 . 5min read

Photo by David McBee from Pexels

Crypto scams are pervasive and continue to be one of the menace accompanied by the growth of cryptocurrencies. In a recent Twitter post, Chainalysis reports that victims to crypto scams have lost over $381 million in 2020.

Chainalysis which has been following and giving updates with the recent Twitter Hack reports that this figure is not absolute as there are still cases under investigation. Some others, of course, are yet to be reported; perhaps they slipped out investigators’ radar.

Chainalysis’ tweet shows the trend is rising. For instance, funds siphoned by crypto scams grew by almost 500% from Q1 to Q2

Graph showing crypto scams in 2020. It shows about 500% increase from Q1 to Q2
Source: Chainalysis Twitter

Crypto Scams can be of varying types. However, all these scams can be classified into different categories. Fake ICO, Fraud, Phishing and Trust Trading are the different categories CryptoScamDB, an open-source dataset which tracks malicious URLs and their associated wallet addresses classifies them into.

Of all the prevalent crypto scams, Trust Trading which is typical of the Twitter Hack Bitcoin Scam is the most used tactic by scammers.

Data from CryptoScamDB shows this with Trust Trading technique leading with over 70%

A pie chart showing the different types of crypto scams. Trust Trading leads others with 71%

Crypto scams and thefts from exchanges are horrendous but not compared with the legitimate transactions facilitated with cryptocurrencies. A critical on the earlier chart from Chainalysis shows crypto scams from year to date only accounts for 0.3% of cryptocurrency transactions.

Crypto Scams, a growing trend

Reuters reported that $1.7 billion was lost due to this and associated cryptocurrency scams like exchange hacks. This represents an over 400% spike from the previous year.

The trend continued in 2019 of which a total of $4.4 billion in volume was lost to scammers. This represented a 425% increase from the figure reported in 2018.

With the advancement in technology such as those used by Chainalysis and others to track and report the movement of funds in scammers wallet addresses as well as stringent KYC and AML policies of exchanges, will 2020 show a reduced figure in these scams and thefts? It’s just a little over half of the year, let’s see as events unfold.

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