As the crypto market sees its downfall in 2022 with the significant drop in the value of all cryptocurrencies during May and June and the current stabilization within the previous few weeks, it was not the only thing to collapse. The crypto scam industry and other illegal activities connected to crypto had, too, experienced a downfall.
The crypto trade and transaction volumes have dropped severely this year. Additionally, the illegal transactions have decreased in volume by roughly 15%. Unfortunately, this data is not true for all cryptocurrency-based crimes. Some have gained more transaction volume, while others have declined more than the market itself, closed, or were shut down by regulators.
The total income of scams done with cryptocurrencies in 2022 so far has been roughly 1.6 billion USD, which is 65% less than last year and it seems to have been connected to the decline in the value of cryptocurrencies.
Additionally, the number of people who became victims of scams is the smallest so far, when compared to the previous years. This can possibly be explained by the fall of Bitcoin, which pushed many new and inexperienced investors away from cryptocurrencies. On the other hand, this can also be explained by the increased adaptation and regulation of digital assets across the world, leading to increased risk awareness, takedowns of scam projects, and the establishment of regulatory bodies for the digital assets markets.
As of 2022, the top 3 crypto scam projects are JuicyFields.io, Unique-Exchange.co/PARAIBA.world, and at last OmegaPro.world. These scams have received roughly 650 million USD in total throughout July 2022. On the contrary to 2021’s scam projects Finiko, Mind.capital, and CashFXGroup.com received 1.9 billion USD in total throughout July 2021.
So far, the biggest scam of 2022 had earned around 273 million USD worth of digital assets. This value is equivalent to 24% of Finiko’s income at the end of July 2021.
The darknet market revenue also reached its lowest points, being down 43% compared to July 2021. This was until April 2022, when the market was much higher than the 2021 comparison, but then the market lost much of its value. This can be ascribed to a fairly significant event of 2022, when the shutdown and sanctioning of one of the largest darknet platforms - Hydra Marketplace happened on April 5th. Hydra, which was one of the biggest darknet monopolies for drug sales, stolen data, hack tools, darknet forums, and finally money-laundering services, was finally shut down.
The shutdown of Hydra was followed by an increased amount of individual transfers. This can be thought of as the migration of many vendors and customers from Hydra to other markets in search of a replacement. Yet, this series of events showed how the law enforcers can fight cryptocurrency-based crimes.
As of July 2022, 1,9 billion USD worth of crypto has been stolen by hackers, making it 0.7 billion USD more than last year through July. The attacks would not stop either, the 190 million USD hack of Nomad and the 5 million USD hack of Solana wallets already happened in the first week of August.
Much of those stolen funds come from the DeFi protocols hack, which became popular in 2021. DeFi protocols, having open source code can be studied and tested for weaknesses, making them hackers' main target. Being open source can be also helpful due to audition from other users, further increasing its security. It is estimated that much of the value from the hacks can be attributed to North Korean elite hacking units such as Lazarus Group. So far, it is estimated that the North Korean hackers have stolen approximately 1 billion USD worth of digital assets from DeFi protocols.
To annihilate crypto crime, it is advised to increase security measures and educate the public on how to invest safely. While the law enforcement agencies focus on broadening their ability to regulate the crypto market and be able to seize the stolen digital assets, which will only make hacks not worthwhile.
