The Year Cryptocurrency Crime Took a Dip
In an unexpected twist that could almost qualify as a plot twist in a heist movie, crimes targeting the virtual currency sector took a nosedive in 2020. According to blockchain security firm CipherTrace, losses from cryptocurrency theft, hacks, and fraud nosedived by 57% to a jaw-dropping $1.9 billion. In the previous year, the tally had reached a record-breaking $4.5 billion, leaving many scratching their heads and wondering if the robbers had finally taken a sabbatical.
The Scams that Shook the Crypto World
Now, before you start planning your celebratory crypto party, let’s address the elephant in the digital room—the massive exit scams that dominated the crime landscape. The infamous PlusToken Ponzi scheme single-handedly pulled in a staggering $2.9 billion, leaving many innocent investors seeing red. Hot off the heels of PlusToken was WoToken, another scheme that conned investors out of $1.1 billion. If you thought 58% of major crime volume was alarming, it’s downright terrifying when you realize those numbers correspond to some of the same culprits.
Fraud, Theft, and Ransomware: The Crime Hierarchy
According to CipherTrace’s report, fraud takes the crystal crown as the dominant cryptocurrency crime, with theft and ransomware following behind like confused sidekicks. The CEO of CipherTrace, Dave Jevans, told Reuters with a slight sense of pride, “Thefts from hacks against centralized exchanges continue to decrease as these financial institutions mature and adopt stronger security measures.” Yes, dear reader, it seems the exchanges are finally getting their act together.
Decentralized Finance: The Wild West of Crypto Crime
However, just when you thought it was safe to go back into the waters of digital currencies, 2020 saw a surge in crimes related to decentralized finance (DeFi). Dubbed the ‘rug pulls,’ these schemes were akin to getting a surprise pie in the face after a long-winded song about honesty. In these cases, creators hype tokens artificially, then pull the rug out from under unsuspecting latecomers. CipherTrace noted that half of all 2020 crypto hacks were of DeFi protocols—a rate virtually unthinkable in years prior.
The Biggest Heist of 2020
Unified by the chaos of the DeFi world, the report revealed the largest theft of 2020: a monumental $281 million heist on the centralized exchange KuCoin. Criminals not only took the cash but also attempted to launder the stolen funds through Uniswap, the leading decentralized exchange. With politicians wringing their hands, Jevans emphasized that the lack of regulation in DeFi platforms allows these rogues to operate in a manner that centralized exchanges, banks, and typical money service providers wish they could.
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