Less gullible retail investors and falling asset prices have made scams a less attractive business, but a tsunami of new DeFi applications is keeping hackers licking their lips.
Fewer people fell victim to cryptocurrency scams in 2022 due to falling asset prices and the withdrawal of inexperienced cryptocurrency users from the market, according to a new crime report.
According to a report by Chainalysis on August 16th, total annual cryptocurrency fraud revenue is currently $1.6 billion, which is a 65 percent decline from a year ago, which appears to be due to the fall of cryptocurrencies. Prices.
Since January 2022, fraud proceeds have fallen more or less in line with Bitcoin prices. […] it’s not just the fall in fraud revenues – the cumulative number of individual transfers to fraudsters so far in 2022 is the lowest in four years.
Eric Jardine, Head of Cybercrime Research at Chainalysis, author of the report, says crypto investors are more likely to fall for the bait during bull markets when investment opportunities and huge returns are most attractive to victims.
Source: Chain analysis.
Jardine also suggested that bull markets also typically see a higher prevalence of new, inexperienced cryptocurrency users who are more likely to fall victim to scams.
The researcher said the results are also skewed by the relatively large PlusToken and Finiko scams in 2021, which generated $3.5 billion in total fraud revenue.
Conversely, Jardine points out that the biggest 2022 scam so far has raised just $273 million and involves cannabis investment platform JuicyFields.io, which allegedly blocked investors from accessing their accounts on its cannabis-focused “e-growing” service.
Hacks and stolen funds
While scam revenues have fallen over the year, Jardine notes that the crypto-based hack reversed the trend, rising 58.3% by July 2022 to $1.9 billion, and that figure does not include the $190 million Nomad Bridge hack. dollars, which began on August 1.
Source: Chain analysis.
Jardine said that this increase is largely due to the rise in DeFi applications, which have skyrocketed in 2021:
DeFi protocols are particularly vulnerable to hacking, as their open source code can be studied until cybercriminals looking for exploits start to vomit.
But Jardine added that it’s not all that bad because smart contract programming languages like Solidity are relatively new, and these exploits can be “beneficial for security because they allow code to be audited.”
The report also notes that most of these hackers came from elite North Korean hacking units such as the Lazarus Group, with about half of the crypto stolen in the hack coming from these groups alone.
Jardine also noted that darknet market revenue in 2022 has decreased by 43%, mainly due to the April 5 shutdown of the Russian Hydra Marketplace darknet servers by German law enforcement agencies.
Darknet markets are black markets on the darknet that offer illegal goods and services for sale, often using cryptocurrencies as a form of payment.