- Theft of cryptocurrencies has increased by 516 percent since 2020.
- Cryptocurrency investment is on the rise throughout the world.
As more people participate in crypto markets. There has been an increase in frauds and thefts of cryptocurrency. Covid-related uncertainty has led to a rise in popularity for virtual currencies like Bitcoin and Ethereum. Cryptocurrency investment is on the rise throughout the world.
The emergence of decentralized finance (DeFi) platforms is primarily to blame for the record $14 billion in crypto scams in 2021, according to statistics from blockchain analytics company Chainalysis.
The rise in theft and fraud was largely responsible for the increase in losses caused by crypto-related crime, up 79% over a year. Most cryptocurrency-related crimes in 2021 were committed via hacking of crypto firms, with scamming and theft coming in second and third. According to the analytics firm, this is another cautionary tale for individuals dipping their toes into the crypto industry’s new DeFi market.
Conventional financial transactions, such as getting a loan, are becoming more challenging to complete without the involvement of traditional financial institutions, such as banks. A smart contract, a programmable code, replaces banks and attorneys in the DeFi system.
Rug Pull Scam
There is no need for a central middleman. This contract is published on a public blockchain like Ethereum or Solana and runs when particular cases are satisfied. Theft of cryptocurrencies has increased by 516 percent since 2020. Seventy-two percent of the total stolen monies came via the DeFi protocols. More than $7.8 billion worth of cryptocurrencies was lost due to frauds, an 82% increase.
Most of this money came from a “rug pull” scam. In which developers establish what look to be real cryptocurrency companies before stealing the money from investors and vanishing.