Despite a general market slowdown in 2022, illicit crypto-related activity grew across the board.
On June 28, a blockchain intelligence company called TRM Labs released a report estimating that in 2022, bitcoin pyramid and Ponzi schemes will receive payments totaling about $7.8 billion worldwide. According to the analysis, an extra $3.7 billion was lost due to hacks or exploits, and $1.5 billion worth of cryptocurrency was utilized for illegal purposes on darknets. This shows that cryptocurrency-related crime has not decreased despite the current bear market and the falling prices of cryptocurrencies.
Ten of the biggest cryptocurrency Ponzi and pyramid schemes accounted for over 54% of the entire cash paid to these fraudulent schemes, according to TRM Labs experts. Additionally, the volume of investment fraud schemes on Tron, a blockchain platform, increased significantly in 2022, with an estimated 40% of the entire inbound volume occurring there.
A large portion of this activity was made possible by the stablecoin Tether (USDT), which was released on the Tron network. In contrast, only 17% of the volume in 2021 was made up by Tron.
The research named two prominent cryptocurrency Ponzi schemes that might be subject to legal action in 2022. Through two connected businesses, the Forsage scheme—which used Ethereum (ETH) and Binance Chain (BNB) contracts—was able to raise over $974 million in investments.
The cryptocurrency exchange Trade Coin Club, on the other hand, attracted over $295 million from over 100,000 investors by promising large profits. Following their failure, the U.S. Securities and Exchange Commission imposed sanctions on both schemes.
The proliferation of bitcoin fraud and scams highlights the need for greater industry regulation and vigilance. The report’s results make clear the enormous financial losses that many who were duped by these schemes endured. It is essential for users and investors to take caution, do their homework, and be aware of any hazards involved with using cryptocurrencies or taking part in dubious schemes.
The increase in financial fraud related to cryptocurrencies highlights the significance of strong security measures and risk management procedures within the bitcoin ecosystem even more. It is crucial for individuals, companies, and regulatory agencies to work together to devise efficient measures to prevent fraud and secure consumers’ money as the acceptance and popularity of cryptocurrencies continue to rise.
To protect investors and uphold the integrity of the financial markets, regulatory bodies including the U.S. Securities and Exchange Commission have taken steps to investigate and penalize fraudulent crypto schemes. These initiatives are essential for upholding public faith in the bitcoin sector, promoting a safer working environment for legitimate players, and discouraging illegal activity.