Crypto crime falls by more than 15% in 2022

The total revenue of crypto scams is 65% lower than the same period in 2021

Crypto hack                                 
The number of individual transfers to crypto scams is the lowest it has been in four years – Photo: Shutterstock
                                

Cryptocurrency crime has fallen by 15% in volume year-on-year as the crypto sector went through a significant slowdown in the earlier months of 2022, research by Chainalysis has found.

However, “legitimate" volumes are down 36%, thanks to the fall in value of most cryptocurrencies, so that as a proportion, "illicit" volumes are up. This suggests that criminal activity appears to be more resilient in the face of falling cryptocurrency prices.

The total sum lost to scams and hacks currently sits at $1.6bn for the year to date, 65% lower than the same period to the end of July in 2021. But the total number of individual transfers to crypto scams is also the lowest it has been for four years. 

Chainalysis said: “Those numbers suggest that fewer people than ever are falling for cryptocurrency scams. One reason for this could be that with asset prices falling, cryptocurrency scams, which typically present themselves as passive crypto investing opportunities with enormous promised returns, are less enticing to potential victims.

“We also hypothesize that new, inexperienced users who are more likely to fall for scams are less prevalent in the market now that prices are declining, as opposed to when prices are rising and they’re drawn in by hype and the promise of quick returns.”

Analysis shows that the drop in crime could be linked with the overall decline in prices across several different currencies, including cryptocurrencies such as Bitcoin, which saw more than 60% of its value wiped this year.

Bitcoin is currently trading around the $23,700 mark, a significant drop from its all-time high of more than $68,000 in November 2021.

2021 recorded all-time high figures

While the decline in cryptocurrency scams might be significantly lower in comparison to 2021, stealing crypto through various new methods is currently on the rise.

Cryptocurrency crime almost doubled in 2021, with illegal activity hitting a whooping $14bn over the course of the year, up from $7.8bn in 2020.

Several “big-time” scams played a role in raising the figure last year, while 2022 has witnessed a shift towards more cryptocurrency being stolen from DeFi platforms that ever before.

According to the research, 97% of all cryptocurrency stolen in the first three months of 2022 was from DeFi protocols, up from 72% in 2021 and 30% in 2020.

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