Research: $3.5bn lost to crypto scams in 2022

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DeFi
Research: $3.5bn lost to crypto scams in 2022

Crypto investors have lost almost $3.5bn to crypto scams and rug pulls in 2022 alone. According to a research report released by Privacy Affairs, the FTX collapse constitutes more than half of the figure.

2022: a year to forget for crypto investors

Data privacy and cybersecurity research company Privacy Affairs has released a report entitled ‘Cryptocurrency Scams of 2022’. It highlights the impact that scams have had on the crypto industry since the turn of the year.

In the document, Privacy Affairs noted that crypto investors had lost nearly $3.5bn to scams and rug-pulls this year, with DeFi suffering the most.

In addition, the report identified the much-publicized FTX collapse as the most significant contributor to the estimated figure, as investors lost an estimated $2bn due to the FTX debacle, which has crushed many top crypto companies.

Asides from FTX, the researchers have revealed that other crypto companies, including NFT-based gaming platform Axie Infinity, also recorded huge losses this year.

In total, Axie’s Ronin Network lost $615m, Wormhole crypto bridge over $320m, JuicyFields $273m, and Unique-Exchange $267m to scams and bad actors.

DeFi protocols hit hard

Between January and July 2022, bad actors stole nearly $2bn in crypto from blockchain firms, representing a 37% increase from 2021. DeFi protocols have been the worst hit among the sectors in the crypto industry.

In Q1 2022, 97% of all stolen cryptocurrency came from DeFi protocols. In addition, investors in this sector have lost over $1bn from the beginning of January 2021 through March 2022 to cryptocurrency scams.

The data privacy firm also noted that flash loan attacks had become a growing trend among bad actors. This attack exploits a platform’s smart contract security, enabling an attacker to borrow large sums of money with no collateral. The scammers then manipulate the price of a cryptocurrency asset on one exchange before quickly selling it on another.

The report revealed that in Q2 2022, crypto lending companies lost over $308 million due to flash loan attacks.

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Ogwu Osaemezu Emmanuel

Ogwu Osaemezu Emmanuel is a graduate of Mass Communication and Media Studies. He joined the blockchain movement in 2016 when a friend of his introduced him to an investment platform accepting bitcoin. He has never looked back since then. Emmanuel believes the world needs real change and freedom from poverty. He sees crypto and the underlying distributed ledger technology as the catalyst to a better future for all.