Crypto, NFT losses expected to reach $25 trillion, says industry researcher

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Crypto, NFT losses expected to reach $25 trillion, says industry researcher
A Comparitech researcher suggests that cryptocurrency and NFT scams accounted for $25 trillion in losses. (Photo by Marco Bello/Getty Images)

Following the recent hyperactive swings, the market for cryptocurrencies and non-fungible tokens has reportedly exploded to over $3 trillion held by over 300 million people worldwide.

However, the current market size is only a fraction how much was lost over the past few years, according to at least one prominent industry analyst. Recent findings suggest that “$25 trillion and more has been lost to cryptocurrency and NFT mat pulls and scams to date,” according to a recent publication by Rebecca Moody, Head of Data Research for Comparitech.

“Like our cryptocurrency and NFT Heist Trackers have found, cryptography is a lucrative business for hackers,” Moody pointed out. “These trackers, however, do not account for insider jobs and scams, such as Ponzi schemes.”

Therefore, the researcher created new tracking systems to count so-called “rug pulls” and scams, which are usually not included in this loss accounting.

Carpet pull-ups incorporate losses in “both newly minted crypto tokens or NFT, where the founders pull out before the project is fully built as well as exit scams from longer, more established projects,” according to Moody, who described his assessment in a blog post earlier this month and updated it. day August 24. also covers scams who are motivated by Ponzi schemes, honeypots and posing as other types of digital currency.

But how could crypto losses have exceeded the value of the Gross Domestic Product of many countries over the years without attracting so much attention, let alone more intervention? Or, more precisely, why the losses then grossly underestimated according to Moody’s assessment?

“Based on the research we’ve conducted, many scams for lower amounts or lesser-known tokens or NFTs go under the radar and aren’t heavily reported, if at all,” she pointed out in a post. interview. She added that some of these covert attacks “may only show up in tracking tools like those offered by PeckShield and Certik.”

Therefore, Comparitech sought to collect information on as many of these seemingly low-value scams as possible “as well as all of the more well-known ones, this gave us a clearer picture of the true extent of the problem.” And yet, despite the incredibly high number of crypto losses to date, Moody’s said the estimate may not yet be exhaustive.

“It is likely that there are others that have not been reported on at all,” she pointed out.

“I think there is still a lot of confidence in crypto and NFTs as an investment, especially since it is still a relatively new industry and has become much more” running,'” she said in an interview. “There are also a lot of calls for more regulation, which will build confidence.”

And at the other end of the spectrum, a few recent individual burglaries are off the charts. Case in point: Nomad Bridge was recently caught for over $190 million in the third biggest crypto heist of 2022 and the ninth biggest ever (so far). And the losses are likely to increase with the rise of digital currencies. Global Crypto Adoption grew nearly nine times (880%) in 2021, according to Blockware Intelligence.

The Biggest Crypto Mat Pulls and Scams of All Time (by Comparitech)

Below are the biggest crypto rug mining and scam attempts (based on the amount of US dollars stolen at the time of the attack) to date:

  1. OneCoin – $4 billion stolen: This Ponzi scheme started in 2014 and lured investors by promising high rates of return with little or no risk. At its peak, OneCoin reportedly had over 3 million members from around the world, grossing $4 billion to $19 billion. And to date, it is also the most “successful” crypto scam as the search continues for the so-called “Cryptoqueen”, Ruja Ignatova, who was allegedly behind the scheme. In July 2022, Ignatova was added to the FBI’s “Ten Most Wanted Fugitives List”.
  2. Africrypt – $3.6 billion stolen: In April 2021, Africrypt’s BTC pool, which was valued at $3.6 billion, disappeared. The two founders (brothers Raees and Ameer Cajee) said the platform was attacked and all funds ran out. However, a week before said attack, Africrypt employees found themselves unable to access the back-end of the platform. While the two brothers denied any involvement in the attack, they disappeared a month later. They are said to have now settled in the UK with their families and continue to deny any involvement, suggesting they fled in fear for their lives. They also said the maximum amount traded was $200 million and the amount lost was $5 million, not $3.6 billion.
  3. GainBitcoin – $3 billion stolen: In India’s biggest crypto scam, 385,000 to 600,000 bitcoins were reportedly collected. Comparitech’s $3 billion figure is based on the lowest estimate (at the time of the theft in March 2018), but the highest estimate extends up to $4.7 billion. The program reportedly offered investors monthly returns of 10% on bitcoin-on-bitcoin investments. In March 2018, two directors of the company (Amit Bhardwaj and Ajay Bhardwaj) were arrested. Amit died in January 2022, but the case against Ajay is still ongoing with estimates of the monetary amounts involved continuing to rise.
  4. BitConnect – $2 billion stolen: In the BitConnect fraud scheme that ran through August 2021, investors were defrauded of $2.4 billion. The founders of BitConnect touted the platform’s technology as being able to guarantee returns and generate substantial gains while trading in the volatile crypto market. However, this was all just an elaborate Ponzi scheme and in February 2022, the founder, Satish Kumbhani, was indicted.
  5. PlusToken – $2.25 billion stolen: From 2018 to 2019, investors were defrauded of 14.8 billion yuan (US$2.25 billion) in the PlusToken crypto Ponzi scam. Millions of people have fallen for the scam whereby they paid a membership fee promising that they would be offered high returns on investment. In 2020, the ringleaders were jailed for up to 11 years.
  6. Wirecard – $2.1 billion stolen: In June 2020, Wirecard, a card issuer supporting crypto payments, released a statement indicating that $2.1 billion in cash was missing. They pointed to a third party’s ‘fake’ cash balances, but three key men behind the company, including former chief executive Markus Braun, have been accused of embezzlement, market manipulation and fraud gang in March 2022.
  7. Thodex – $2 billion stolen: In this exit scam in April 2021, Thodex was allegedly “temporarily shut down” before the founder shut down the platform completely and fled with $2 billion in investor funds. The founder, Faruk Fatih Ozer, has denied it was an exit scam but is still at large. If caught, many want him to serve a 40,000 year prison sentence! Some estimates suggest that up to $2.6 billion could have been stolen.
  8. WoToken – $1.1 billion stolen: More than 715,000 victims have been affected by this $1.1 billion scam. In this Ponzi scheme, investors were told that exceptional returns would be generated by the platform’s algorithmic trading robots, but, as is the case with most of these schemes, the technology simply did not exist. . Today, the stolen tokens (46,000 BTC, 2 million ETH, 292,000 LTC, 56,000 BCH and 684,000 EOS) are worth over $5 billion. Six defendants were tried for the Ponzi scheme and each pleaded guilty and received recommended prison sentences of six months to 11 years (a far cry from the suggested sentence for the founder of Thodex).
  9. Arbistar – $1 billion stolen: Spanish police arrested the leader of this billion dollar crypto scam in October 2020. The Ponzi scheme (run by parent company Arbicorp) duped around 120,000 users and raised over $1 billion in bitcoins.
  10. BitClub Network – $722 million stolen: This cryptocurrency mining program ran from April 2014 to December 2019 and accumulated at least $722 million in funds. Investors were told that they would receive shares in crypto mining pools while being rewarded for introducing new investors to the program. In September 2020, a Californian, Joseph Frank Abel, pleaded guilty to selling unregistered securities and filing a false tax return.

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