More than two-thirds of crypto crimes in 2020 come from scams and frauds
The total amount lost due to crypto-related crimes almost reached $10.5 billion in 2020, which is slightly lower than 2019’s figure.
Wed, 03 Mar 2021, 11:40 am UTC
With the sky-high prices of Bitcoin (BTC) and other cryptos due to the rally, digital currencies have become more attractive to criminals. A recent report revealed that more than two-thirds of the total amount lost due to crypto-related crimes comes from fraud and scams.
The total amount lost due to crypto-related crimes almost reached $10.5 billion in 2020, which is slightly lower than 2019’s figure, according to Coindesk. Research by the blockchain analytics firm Coinfirm revealed frauds and scams accounted for 67.8 percent or more than two-thirds of the total figure.
The study noted that there was a sharp rise in the amount lost to scams and fraud in 2020 compared to the previous year, which is likely due to the PlusToken scam where investors lost around $2.9 billion to the criminals. The report noted that funds lost through scams and frauds have doubled since 2017.
For comparison, the crypto funds lost to frauds and scams is more than seven times the amount lost through hacks. The report revealed that hacks only accounted for 9.6 percent of the total amount.
Darknet market and drugs made up 18.4 percent of the total. On other hand, sanctions breaches accounted for 3.9 percent of last year’s total.
The research also included three financial crime categories that only have a minimum impact on the total amount. While cryptocurrency critics have repeatedly warned on their potential use in terrorism, Coinfirm’s research revealed that crypto-related terrorist financing accounted for just below 0.1 percent. Similarly, the amount lost via crypto-related blackmail and ransomware accounted for just below 0.1 percent each.
However, Coinfirm warned that that the total amount lost might be significantly higher than their data. The reason for this is that crypto crime is hidden and that only 20 percent of the incidents are reported in the year that they occur. In fact, 50 percent of the incidents are never reported at all.
A separate report by the blockchain investigations firm Chainalysis revealed that cybercriminals concentrate their cryptocurrency money laundering activities on a few online services. The company revealed that 55 percent of money laundering activating involving cryptocurrencies was coursed through only 270 crypto addresses in 2020. Cybercriminals usually use online gambling platforms, high-risk (low-reputation) digital currency exchanges, financial services located in high-risk jurisdictions, and cryptocurrency mixing services for money laundering purposes.
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