The frenzied growth of crypto has led to many illegal activities and 2021 witnesses the highest number of crypto scams ever recorded.
Crypto scams hit a record
2021 is the year of cryptocurrencies. Bitcoin hit a peak of around $68,000 in November and Pro Shares launches a new Bitcoin ETF. However, according to blockchain analytics firm Chainalysis, such developments have led to a flurry of illicit activities and 2021 witnesses the highest number of crypto scams ever recorded.
The data estimates that $8 billion in cryptocurrency has been stolen from victims over the course of the past 12 months. This is an increase of about 81% compared to 2020.
Squid Game Token Scam Chart
In a statement, Chainalysis explained that crypto-based crime targeting new users, and fraud poses one of the biggest threats to the continued use of cryptocurrencies.
The good news is that the number of deposits to scam addresses has dropped from 11 million to a little over four million. That means more people have become smarter, detecting how criminals work and taking the necessary measures to protect themselves.
The scammers have upgraded, now they create new coins and invite people to invest. Once they get a certain amount, they withdraw all the money.
How to protect yourself
The company outlined ways investors can protect themselves from such scams:
The most important thing is to avoid new tokens, which have not undergone code audit. Code audit is a process by which a third-party company analyzes a smart contract’s code and publicly confirms that the contract’s governance rules are accurate and that there is no mechanism for developers to take money from investors. Investors must also be wary of tokens that lack public documents, such as a website or whitepaper, as well as tokens created by individuals who do not use their real names.
Also according to Chainalysis’ analysis, the number of financial scams has increased from more than 2.000 in 2020 to more than 3.300 this year.