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      • Crypto Scams Witness A 1053-Fold...
      Explainers

      Crypto Scams Witness A 1053-Fold Increase In 12 Years: Report

      The Money Mongers' recent study reveals a startling increase in cryptocurrency scams from 2011 to 2023, with losses soaring from $1.79 million to $1.89 billion.

      By - Hera Rizwan |
      Published -  12 Oct 2023 6:05 PM IST
    • Boomlive
      Crypto Scams Witness A 1053-Fold Increase In 12 Years: Report

      According to a recent study by The Money Mongers, a collective of cryptocurrency enthusiasts and researchers, from 2011 to 2023, cryptocurrency scams have seen a jump of 1053 times, rising from $1.79 million to $1.89 billion. Cryptocurrency or the virtual decentralised currency, has revolutionised the financial world, attracting investors and enthusiasts from all walks of life.

      Nonetheless, as these digital assets gain more widespread appeal, opportunistic scammers have identified fresh avenues to deceive gullible individuals. Crypto investment frauds now pose a substantial worry, capitalising on people's aspirations for rapid profit generation.

      The report has been curated after analysing data through multiple sources, several news articles, reports of individuals and third-party security research firms. Here's what the report says about the largest crypto hacks and thefts since the beginning of the crypto market.

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      Key highlights from the report

      - In 2023, a total of $1.89 billion was lost due to 298 crypto hack incidents. The preceding year, 2022, marked an all-time high for crypto hacks, with $3.5 billion stolen in 284 separate heists.

      - From 2011 to the present day, crypto companies and exchanges have suffered cumulative losses amounting to $12.36 billion in 1207 different incidents. Over this period, a total of 193 crypto exchanges were compromised, resulting in a combined loss of $3.80 billion.

      - The year 2018 stood out as particularly grim for crypto exchanges, as they collectively lost $1.1 billion due to hacking and theft incidents.

      - Furthermore, there has been a noticeable increase in DeFi (decentralized finance) hacks, with 93 incidents in 2022 and 76 in 2023, leading to a combined loss of $1.12 billion.

      - Regarding the theft of two of the most well-known and widely used cryptocurrencies, Bitcoin and Ethereum, a total of 1,454,762 BTC and 1,175,082 ETH have been lost to various hacks, since 2011. If we evaluate these losses based on today's BTC and ETH prices, the figures would amount to $40.27 billion and $1.93 billion, respectively.

      - Two most common types of hacks, namely contract vulnerability and flash loan attacks, have contributed to a cumulative loss of $2.75 billion since 2011.

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      Growing crypto scams

      Cryptocurrency is a digital or virtual form of currency that relies on cryptography for security. It operates on decentralised networks, like blockchain, and is not controlled by any central authority, such as a government or a bank. Cryptocurrencies enable secure, transparent, and peer-to-peer transactions, and their ownership and transactions are recorded on a distributed ledger known as the blockchain.

      Blockchain is a distributed and immutable digital ledger that records all cryptocurrency transactions in a transparent and tamper-resistant manner. It consists of a chain of interconnected blocks, each containing a batch of transactions. This technology underpins the security and trustworthiness of cryptocurrencies.

      Crypto scams resemble typical financial scams, with the distinction being that the perpetrators target the cryptocurrency assets instead of the money. Crypto fraudsters employ similar techniques seen in other financial illicit activities which entice investors with false promises regarding an asset's worth, and direct efforts to steal digital assets.

      Some of the common crypto scams include-

      Contract vulnerability- A contract vulnerability in cryptocurrency is like a security loophole in a computer program. It can allow bad actors to do things they're not supposed to, like stealing money or messing up the program's data.

      Flash loan attacks- This type of crypto scam takes advantage of the mechanism of flash loans. Flash loans do not require the borrower to provide collateral, making them attractive for malicious actors. This money is then used to mess with the prices of things by creating arbitrage opportunities or exploit weaknesses in the system to make a lot of money quickly.

      SIM swap scam- SIM-swap scams are relatively recent breed of crypto scams where scammer gets access to a copy of your SIM card and can access all of the phone’s data. This can be then used to acquire the two-step authentication codes needed to infiltrate cryptocurrency wallets and various accounts discreetly.

      Upgrade scam- In the digital realm, software undergoes frequent updates, and cryptocurrency platforms are essentially a type of software. Given that people are accustomed to these digital upgrades, fraudulent actors can readily deceive cryptocurrency holders by coaxing them to surrender their private keys under the guise of an "upgrade".

      Pump and dump scam- This deceptive scheme unfolds when a group of people collaborate to lure unsuspecting investors into putting money into a specific cryptocurrency. Typically, they achieve this by creating posts on social media platforms to generate excitement and interest. Subsequently, these scammers coordinate efforts to artificially boost the cryptocurrency's price. Then, they collectively sell their holdings, leaving the newly invested individuals with losses and disappointment.

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      Tags

      Cryptocurrency#Scam
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