CipherTrace Shows 57% Drop In Crypto Crime But Rise In DeFi Hacks

CipherTrace stands as a notable blockchain security firm, and has recently revealed that the virtual currency sector has seen a decrease in crime by 57% in the year of 2020.

Crypto Crime Drops By 57%

The 2020 crypto crime and anti-money laundering report of the firm has made it clear that a total of $1.9 billion in value was lost by way of fraud, hacks, and crypto theft. However, this stands as a far cry from 2019’s numbers, which had a record high of $4.5 billion. The 57% drop has mainly been attributed to an improvement on the security systems of the world’s blockchains.

Another key fact CipherTrace highlighted was the exit scams of incredible scopes, such as the PlusToken Ponzi scheme. This scam alone netted a total of $2.9 billion in illegal gains throughout two years, and has subsequently dominated the crypto crime space.

The year 2020 saw similar schemes pop up, perpetrated by some of the same culprits as before. One such scheme, the WoToken, saw investors defrauded by the tune of $1.1 billion. This, in turn, accounts for 58% of 2020’s major crime volume, which is honestly darkly impressive and very sad.

Fraud Biggest Perpetrator

As the above information shows, the report had concluded that the dominant crime in the crypto space was fraud. After that, ransomware and theft were the runner-ups.

In an interview with Reuters, the CEO of CipherTrace, Dave Jevans, gave a comment about the matter at large. He explained that large-scale thefts caused by the hacking of centralized exchanges are on a decline, thanks to these financial institutions adopting stronger security measures as they mature.

DeFi Now A Crime Hotbed

However, it should be noted that the Decentralized Finance (DeFi) space has seen a massive rise in crime related to it during 2020. One of the biggest perpetrators in this space is the so-called “rug pull” schemes, where tokens are inflated and hyped artificially. The early investors and creators of the coin then dump their assets after it got pumped to that degree, which left many of the latecomers without anything left from their investments.

The report highlighted that some of these bad actors actually liquidate the liquidity pool in its entirety. As a result, the remainder token holders are left incapable of trading, which wipes all the value of these tokens in one fell swoop.

Indeed, Jevans highlighted that over 50% of all the hacks within the crypto space were done against DeFi protocols, highlighting how this metric was virtually negligible in all the years before.

He further highlighted that almost the entirety (Almost 99%) of all major fraud volumes for 2020’s second half came by way of DeFi’s “rug pulls” and various other exit scams. Jevans made note that this all seemed eerily similar to the metrics showed within the great ICO craze of 2017.