Global cryptocurrency markets are reeling after the infamous FTX implosion burned an estimated $2 billion hole in investors’ pockets. But a new survey reveals that nearly DOUBLE that amount has been lost to scams and ‘rug-pulls’ across 2022.
Cybersecurity and data privacy specialists from Privacy Affairs, in their round-up of Cryptocurrency Scams of 2022, cited the failure of crypto exchange FTX and its enigmatic founder Sam Bankman-Fried as the biggest loss to online investors in 2022.
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The fall-out, says Privacy Affairs CEO and Founder Miklos Zoltan, will reverberate around the unregulated cryptocurrency markets for many months to come as investors try to extract themselves from flaming wreckage of FTX.
The survey revealed the five biggest crypto losses, scams and hacks of 2022 ranked by amount of money lost or stolen ($100 million and above) accounted for nearly $3.5 billion. They are:
1. FTX $1-2 billion
2. Axie Infinity’s Ronin Network: $615m
3. Wormhole crypto bridge: $320m
4. JuicyFields.io scam: $273m
5. Unique-Exchange.co/PARAIBA scam $267m
Their research showed that between January and July 2022, hackers stole $1.9 billion worth of cryptocurrency – a 37% increase on the same period in 2021. According to Solidus Labs, threat actors in the crypto industry launch up to 15 crypto scams per hour.They revealed that in Q1 2022, 97% of all stolen cryptocurrency came from DeFi protocols. According to the FTC, consumers lost over $1 billion from the beginning of January 2021 through March 2022 to cryptocurrency scams.
While Americans lost $329m to cryptocurrency scams in Q1 2022, Australians lost $166m in investment and cryptocurrency-related scams across 2022. Investors in Hong Kong lost $50 million to cryptocurrency scams in 2022.The research showed that scammers prefer Bitcoin (70%), Tether (10%), and Ether (9%) to set up their cons. Social media platforms, such as Instagram (32%), Facebook (26%), WhatsApp (9%), and Telegram (7%) are used for crypto scams.
Mr Zoltan said statistics show young people (20 to 40) are more susceptible to crypto scams than any other age group. “What our research shows is that cryptocurrency scams and related fraudulent activities are not plummeting anytime soon,” he added.Privacy Affairs research showed that in 2021, $2.8 billion was lost to rug pulls. Investors lost over $2.6 billion to the Thodex (Turkish crypto exchange) rug pull.In 2022, more than 188,000 rug pulls on various blockchains, such as BNB and Ethereum, have been enacted. According to Solidus Labs, 2022 has seen an increase of 20% in crypto scams to 2021, with rug pulls taking a bigger share.
A rising trend seen by Privacy Affairs is cryptocurrency flash loan scams. These allow crypto users to borrow digital assets without collateral – usually, the loan is paid in the same transaction block. The process takes a few seconds once the loan is processed.In Q2 2022, 27 flash loan attacks resulted in a loss of over $308 million. A flash loan attack on the cryptocurrency trading platform Mango Market resulted in a loss of $100 million in October 2022. Statistics show flash loan attacks increased 66.7% in Q2 from Q1 2022. Mr Zoltan advised people to protect themselves by; using established cryptos and tokens, avoiding cryptocurrency projects that guarantee significant returns, and never get crypto investment advice from dating sites and influencers.
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