Cryptocurrency crime is at an all-time high, with scammers raking in more than £10 billion.
In 2021, ILLICIT addresses received £10.34 billion ((dollar)14 billion), up from £5.76 billion ((dollar)7.8 billion) the previous year.
Scams have proven to be a major component of this, according to blockchain researcher Chainalysis, with revenue from fraud rising 82 percent in 2021 to £5.76 billion ((dollar)7.8 billion).
Rug pulls, a relatively new scam in which developers launch an apparently legitimate cryptocurrency, take investors’ money, and then disappear, leaving them unable to cash in, accounted for over £2.07 billion ((dollar)2.8 billion).
In November, a token based on the TV show Squid Game was revealed to be a hoax, with the developers pocketing an estimated £2.48 million ((dollar)3.38 million).
The rise of Decentralised Finance (DeFi) has been a key factor in the growth of rug pulls.
Unlike traditional banking and stock exchanges, DeFi is based on direct peer-to-peer transactions facilitated by public blockchains.
“DeFi transaction volume has grown 912 percent in 2021,” according to Chainanalysis, “and the incredible returns on decentralized tokens like Shiba Inu have many excited to speculate on DeFi tokens.”
“At the same time, even without a code audit, it’s very easy for those with the right technical skills to create new DeFi tokens and get them listed on exchanges.”
Coin audits entail third-party companies or exchanges examining the code behind a new token, with Chainanalysis claiming that many investors could have avoided rug pulls if they had only invested in projects that had gone through a code audit.
Cryptocurrency theft has increased in recent years, with an estimated £2.36 billion ((dollar)3.2 billion) stolen in 2021.
The use of cryptocurrencies to launder money has become a major component of criminal activity involving tokens.
While the total value of cryptocurrency used in crime has increased significantly, one positive is that it has fallen proportionately as a result of the increased legitimate usage.
While illegal use has increased by 79%, the total transaction value of all cryptocurrencies has increased by 567% since 2020, reaching £11.67 trillion ((dollar)15.8 trillion) in 2021.
Illicit address transactions now account for only 0.15 percent of all cryptocurrency transactions, down from 3.37 percent in 2019.
“The UN estimates that 2-5 percent of GDP is linked to money laundering and illicit activity,” Marcus Sotiriou, analyst at digital asset broker GlobalBlock, said.
“As a result, while crypto crime is a problem that needs to be addressed, it is not as bad as it appears.
“Brinkwire News Summary.”