Funds Lost in 2021 Increased by 40x When Compared to 2020

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  • Funds lost in 2021 increased by 40x when compared to 2020.
  • Most cryptocurrency received to scam addresses, like in past years, wound up on conventional exchanges, resulting in crypto users losing their assets.
  • In 2021, DeFi incidents alone lead to a loss of approximately $1.78 Billion as compared to $25.4m in 2020.
  • In fact, blockchain data platform Chainalysis stated in a corporate blog that this increased 81% from 2020.
Funds Lost In 2021 Increased By 40X When Compared To 2020
Funds Lost in 2021 Increased by 40x When Compared to 2020

2021 was a record year for crypto attacks, with not only the number of incidents, such as breaches and fraud but also the amount of bitcoin stolen reaching new highs in the recent decade, demonstrating that crypto crime is growing in lockstep with the global crypto market. According to a report by crypto transaction monitoring and analysis platform Crystal Blockchain, $4.25 billion worth of cryptocurrency was stolen in 76 such events in 2021, the highest during the period 2011-21. During that time, 226 cases involving 120 security assaults, 73 decentralised finance protocol (DeFi) exploits, and 33 fraudulent schemes were disclosed, totalling around $ 12.1 billion in stolen cryptocurrency.

“The exchanges will be able to help here in two ways. One is to blacklist the address of the deposit after the scam gets exposed so that new deposits from exchange’s customers won’t be possible. Also, the exchanges will be able to blacklist the deposits coming directly or indirectly from those black listed addresses so that the scammers won’t be able to liquidate those cryptos,” Sathvik Vishwanath, Co-Founder and CEO, Unocoin told Financial Express Online.

In 2019, the second-largest cryptocurrency loss was $ 3.5 billion, which was removed in 26 separate occurrences. In 31 events in 2020, this was decreased to $ 1.49 billion. Infiltration of bitcoin exchange security systems was the most common method of cryptocurrency theft.

“Exchanges can use on-chain analysis tools to trace back transactions and blacklist addresses involved with such breaches by analysing transactions on the blockchain.” When the hackers are ready to cash out, they may have to sell on a centralised exchange. Deposits from prohibited businesses may be prevented or flagged for the authorities when made using Ethereum or any other blockchain. This would aid in the investigation of such hacks, according to Arjun Khazanchi, Co-founder and CLO of Rooba Finance.

The United States topped the list of regions with the most incidences. US-based crypto services have been targeted 13 times since the inception of the blockchain. China, on the other hand, saw the largest increase in value.

China, on the other hand, has seen the most significant crypto attacks in terms of value. This was primarily owing to the $ 2.9 billion PlusToken Ponzi scheme in 2019 and the associated WoToken scam last year, which received roughly $ 1 billion in cryptocurrency. Aside from the United States and China, the United Kingdom, South Korea, and Japan were the other most common destinations for exchange security breaches.

In 2021, the ecosystem’s market worth skyrocketed, expanding far beyond Bitcoin. According to the IMF report, operational, cyber, and governance risks, integrity (market and AML/CFT) hazards, data availability/reliability issues, and cross-border obstacles are all part of the financial stability challenges posed by crypto. As a result, the financial system will be more vulnerable as crypto scams, and frauds rise.

In 2021, we also saw colossal crypto crashes: Internet Computer (ICP) lost 93% in less than a month, IRON Titanium Token (TITAN) dropped from $52.46 (approximately Rs. 3,937) to $0.00000003 (about Rs. 0.0002) in less than ten days, and SafeDollar (SDO), a stable coin, plummeted to zero.

In Turkey, two cryptocurrency exchanges have shut down. The first was Thodex, whose CEO vanished with $2 billion in investor funds (approximately Rs. 15,009 crores). The second was Vebitcoin, which ceased operations due to “financial strain.” Mycryptowallet and ACX, two Australian crypto exchanges, were also shut down, costing their investors millions of dollars.

Crypto scams and security breaches, in addition to DeFi breaches, are prevalent. Security breaches have resulted in the theft of $2.86 billion, while scams and frauds have resulted in $6.8 billion. As a result, crypto scams or frauds account for more than 65% of all stolen funds.

While the amount stolen through crypto-asset thefts has been steadily increasing. According to Crystal Blockchain data, with an increase of more than 120% between 2018 and 2019, the overall amount stolen saw the most significant spike between these two years.

According to the Crystal Blockchain research, 2021 had the most crypto-asset theft, with assets worth more than $10 million stolen. It also demonstrates that the amount of money taken through crypto-asset theft has increased steadily. However, the overall number of recorded robberies against crypto businesses did not move significantly in 2021, remaining at 31.

During the period 2020-2021, DeFi hacks became the most popular technique to steal crypto, with the total value of stolen virtual assets in crypto stolen through DeFi hacks doubling, according to the report.

Rug pulls, a relatively new scam type, aided the growth of DeFi hacks, according to Chinanalysis.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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