According to data and research on cybercriminal activities, cryptocurrency is set to become even more secure.

Kim Grauer, Research Director at Chainalysis, has provided an insight into how regulatory and cybersecurity firms are working to curb cryptocurrency-related cybercrime over the next year. According to Grauer, the coming year is likely to see a decrease in crypto-related crime as laws are implemented around the world and countries begin to adopt blockchain technology into their traditional systems.

 

Source: chain analysis

Considering the diagram as part of a Chain analysis report, the total funds stolen and cheated from users hit an all-time high in 2021, rising from $14 billion to $7.8 billion. However, it is important to realize that the number of cryptocurrency users and investors has grown faster than ever over the past year. According to Chainalysis’ cryptocurrency tracking, total cryptocurrency transaction volume has increased by a whopping 567% since 2020, bringing $15.8 trillion to change hands over the course of 2021. Given the massive increase in adoption and new users, it is only natural that there would be an increase in those who have experienced cybercrime in the industry.

Looking at the 567% increase in transactions, a 79% increase in cybercrime means that security in the industry is increasing. The growth in legitimate use of cryptocurrencies has far outpaced the use of cryptocurrencies for criminal or illegal activities, and the percentage of illegal activities in the industry has been lower than ever. One look at a chart that accounts for this changes the story and paints a different picture of the increase in cybercrime across the nascent industry. In 2019, the illegal share of cryptocurrency transaction volume was 3.37%, largely due to the PlusToken Ponzi scheme that defrauded millions of dollars from users. That figure fell to 0.62% in 2020, only to fall further to just 0.15% in 2021.

Source: chain analysis

An increase in cryptocurrency fraud

Looking at where funds were lost, fraud revenue increased by 82% from 2020 to 2021, with $7.8 billion worth of cryptocurrencies stolen from victims over the year. Of that, more than $2.8 billion came from rug pulls. This refers to a developer-made scam project that appears to be completely legit, with functionality that goes beyond investment, attracts attention, takes users’ money and then disappears with investors’ money. According to Chainalysis’ report:

“We should note that about 90% of the total value lost to rug pulls in 2021 was due to a rogue centralized exchange, Thodex, whose CEO disappeared shortly after the exchange halted users’ ability to withdraw funds .”

It has been hinted that rug pulls and decentralized projects that appear legit could remain the most prevalent scams in 2022 as the DeFi and NFT industries are evolving so rapidly. The more people tend to decentralize, the more opportunities for fraud arise.

The rise of decentralized finance scams

Two reasons DeFi-related scams are so prevalent are:

• The massive increase in attention the space receives. DeFi transaction volume has grown by almost 1000% in 2021, which represents a massive new user base and hype in the space.
• How easy it can be to list a DeFi token with a code audit (which means that any developer with enough technical skills can create and list a new token and see investments come in. As we can see, the amount goes through Scams related to the DeFi protocol lost in 2021 increased tremendously, increasing by 1330% from 2020 to 2021.

Source: chain analysis

Make Cryptocurrency Safer

With all cyber activities, caution is always the best choice when investing. To make cryptocurrency even safer, we will see investors gain more protection and understanding to protect themselves from cybercrime and illegal crypto usage as more regulation and national sector action come into play.

The article Report: 2022 set to be safer in cryptocurrency first appeared on Coin Insider.

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