Over $7.8B Lost to Crypto Ponzi Schemes in 2022 – Report


The “Illicit Crypto Ecosystem Report” published by blockchain intelligence firm TRM Labs revealed that in 2022 up to $7.8 billion was lost through cryptocurrency pyramid and Ponzi schemes. This is in addition to the $1.5 billion allegedly spent on darknets for illicit activities and another $3.7 billion in cryptocurrency lost in hacks or exploits, according to TRM Labs data. 

Bad Actors Move From BTC to USDT 

This significant loss was attributed to a redirection from Bitcoin (BTC) to other cryptocurrencies. Hence, when BTC is not requested as a payment option, United States dollar-pegged stablecoins Tether (USDT) on Tron is used for these fraudulent activities. This is largely because both coins are some of the most liquid and well known crypto assets in the digital asset ecosystem.

The use of BTC reduced drastically from 97% in 2016 to around 19% in 2022 and this was because the bad actors were seeking other means to move money from one blockchain to another so that it’s harder to track the funds from the outside. USDT became the most preferred and per a statement by TRM Labs, the cryptocurrency is especially popular with ISIS and its affiliates in Pakistan and Tajikistan.

Crypto Hackers Explore Several Options 

TRM Labs highlighted that;

“Investment fraud centers on the solicitation of funds for fraudulent investments or projects; these often involve fake initial coin offerings (ICOs), unregistered securities or fraudulent investment platforms. Investment fraud involving cryptocurrency rose by nearly 200% from USD 907 million in 2021 to USD 2.57 billion in 2022.”

Report from other research showed that about 10 of the largest crypto Ponzi and pyramid schemes were responsible for more than half of the total amount. 

DeFi and Cross-Chain Bridge Attacks Dominate 2022

Despite the bear market last year, these perpetrators of illicit activities increased the rate of their operations to cheat crypto investors out of their hard-earned funds. Most time, these attackers focus on Decentralized Finance (DeFi) exploit or cross-chain bridge attacks like the Axie Infinity Ronin bridge attack which led to the loss of more than $600 million. 

Harmony layer-1 blockchain’s Horizon Bridge attack, which resulted in a loss of around $100 million in altcoins in also another cross-chain bridge attack which h happened in 2022.

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