A research conducted by Finaria.it last year on the global cryptocurrency market showed that malicious hackers and other scammers stole $1.9 billion as against the $4.5 billion in the preceding year.
While the year witnessed a huge growth in the crypto market as many investors turned to digital coins as a store of value in the face of the COVID-19 crisis, more money flowing through digital exchanges, however, created an opportunity for malicious hackers and thieves to carry out frauds, scams and theft.
The research findings indicated that frauds accounted for the highest crypto crime in 2020 and was trailed by theft and ransomware
The surge in cryptocurrency trading fuelled the dynamic growth of the cybercrime world. In 2018, cryptocurrency crimes hit $1.7bn value, revealed CipherTrace’s annual Crypto Anti-Money Laundering and Crime Report. This figure soared by almost 165% year-over-year to $4.5bn in 2019.
Although 2020 witnessed an impressive growth of the entire crypto market, crypto crime was down 57% from 2019, dropping to $1.9 billion. Also, the average value taken by criminal actors was 160% higher in 2019 than in 2020, despite the similar number of crypto frauds, showing the maturity in the crypto space and strong precaution measures against threats.
Research findings showed that fraud was the leading crypto crime last year, followed by theft and ransomware.
Although the total value of crypto crime dropped in 2020, crypto theft jumped by 40% YoY and hit $513 million, still far below the record of $950 million from 2018.
The survey showed that decentralized finance (DeFi)- related hacks and scams – added $129 million to the combined value of crypto thefts in 2020, turning it into the next major threat vector for fraud and money laundering. Other thefts caused $387 million worth of damage.
Chinese Ponzi Scheme, Wotoken, stole over $1billion worth of crypto thefts, representing the biggest fraud last year.
Wotoken, which functioned from July 2018 to October 2019, but was revealed in 2020, worked as a classic multi-level-marketing project, but with a suspiciously high number of total hierarchical levels.
The scam promised investors unrealistic returns using non-existent algorithmic trading software. Ultimately, one Wotoken operator, connected to the infamous PlusToken Ponzi scheme, stole nearly $1.1 billion in crypto from more than 715,000 victims. China sentenced operators of the crypto Ponzi scheme to years in prison.
