- Scammers from across the globe took home around $14 billion in cryptocurrency in 2021. This can be attributed to the growing popularity of Defi.
- Crypto-related crime has increased by a whopping 79% in 2021 in comparison to 2020.
- Cryptocurrency theft rose by around 516% from 2020 to $3.2 worth of crypto. Out of this, around 72% of funds were stolen from Defi protocols.
Crypto scammers stole a staggering $14 billion in 2021. In many ways, the increasing popularity of decentralized finance (Defi) platforms are responsible for this surge in the number of thefts in the crypto space.
Besides, the losses from crypto-related crime increased by a whopping 79% from the previous year, driven by a considerable rise in scams and thefts.
Crypto scamming tops crypto-related crimes in 2021
Scamming topped all the crimes related to crypto-currency in 2021, closely followed by theft. Most of these crimes occurred by hacking different cryptocurrency businesses.
The popular blockchain analytics company Chainalysis said that Defi is a major driver for this – another red flag for anyone who is looking to explore this emergent segment of the crypto market.
The Crypto Crime report published by Chainalysis states that Defi is one of the most interesting areas within the broad cryptocurrency sphere. It presents considerable opportunities to cryptocurrency users and entrepreneurs. The report stated that despite the looming opportunities in this space, Defi is not likely to reach its full potential as the same decentralization concept makes it so dynamic that it enables widespread theft and scamming.
Question marks over Defi and its security
There is little doubt that Defi is one of the fastest-growing sectors within the crypto market that primarily aims to eliminate the need for middlemen such as banks from conventional financial transactions such as getting a loan from a bank.
Within Defi, lawyers and banks are replaced by a programmable code that is known as a smart contract. This code is written on public blockchains such as Solana or Ethereum. It works when a few conditions are met, removing the need for a central intermediary.
Chainalysis report states that the number of Defi transactions increased by a whopping 912% in 2021 alone. Besides, incredible returns on decentralized tokens such as Shiba Inu have also accelerated the popularity of Defi tokens.
At the moment, there are a number of red flags while dealing with the current crypto ecosystem. According to Kim Grauer, Head of Research, Chainalysis, one of the biggest drawbacks with Defi at the moment is the code vulnerabilities of the new protocols that are being exploited by hackers. Nearly 21% of all the hacks in 2021 exploited these vulnerabilities in 2021.
What do you think about the increasing crime in the cryptocurrency space? Do you think these scams will deter the adoption of crypto in the future? Leave your comments below and tell us what you think.