Crypto market frauds totaling $14 billion in 2021

Criminal activity in crypto markets reached an all-time high of $14 billion last year, according to blockchain researcher Chainalysis, whose record-breaking indicators support national regulators’ demands to increase their powers in a fast-growing sector.

The value of cryptocurrencies sent to digital wallets, which were acquired through illicit activities, including fraud, the black Internet market, and the use of malicious software, jumped by 80 percent compared to a year earlier, according to the report.

However, the share of these activities in the total volume of crypto transactions is only 0.15 percent, which is the lowest level ever.

The total volume of transactions jumped to 15.8 trillion dollars in 2021, which is over five times more than a year earlier, the American Chainalysis announced.

The popularity of digital assets, from Bitcoin to non-exchangeable tokens, exploded in 2021 because it was embraced by institutional investors and large companies.

Newcomers to the crypto world are attracted by the promises of quick earnings, as well as the hope that Bitcoin offers protection from rising inflation.

However, the cryptocurrency market is still not covered by regulations, so investors do not have the legal means to protect against fraud.

Financial authorities and monetary policymakers from Washington to Frankfurt are concerned about the use of cryptocurrencies for illegal activities such as money laundering.

“The misuse of cryptocurrencies creates huge obstacles to their further adoption, increases the likelihood that governments will impose restrictions, and worst of all, allows innocent people around the world to become victims,” the Chainalysis said.

The growth of crypto crime was mostly due to fraud and theft on decentralized financial platforms(DeFi), which offer customers loans, insurance, and other financial services on more favorable terms than traditional financial institutions such as banks, without any business code and management is non-transparent.

Total cryptocurrency theft has increased more than fivefold since 2020, to about $ 3.2 billion in stolen coins last year. About $ 2.2 billion of those tokens, or about 72 percent of the total, were stolen from DeFi sites.

Scams on DeFi platforms, such as the so-called “Carpet pulling” where developers set up a site with fake investment opportunities before they disappear with investors’ cash, reached 7.8 billion dollars last year, which is a jump of 82 percent compared to the year before, according to a report by Chainalysis.