It should be noted that the scale of cryptocurrency fraud is indeed impressive. For example, on the eve of the year 2022, representatives of analytical company Chainalysis shared their results. According to their data, the amount of cryptotransactions related to illegal activities set a record for the period.

The volume of fraudulent cryptocurrency transactions

The figure reached $20.1 billion, a peak in the history of cryptocurrencies. In 2021, for example, the result was $18 billion. From this we can conclude that fraudsters don’t really care about the cryptocurrency market conditions: after all, 2021 was the final year of the bull run, when coins showed incredible growth results.

Well, in 2022, most of the coins gave out tens of percent slippage. However, this didn't stop fraudsters from increasing their own "earnings".

A similar trend was previously confirmed by analysts at LianAn Technology. According to their calculations, hacks of decentralized finance platforms in 2022 allowed hackers to make the equivalent of $3.64 billion. Well, that’s up 47 percent from 2021.

The extent of hacking in decentralised finance projects in 2022

Most importantly, the most “profitable” was the last quarter of last year, when coins showed a significant collapse.

How cryptocurrencies are being scammed

An investigation into this particular fraud network was launched back in 2021 by the Stuttgart public prosecutor’s office in Germany and the Baden-Württemberg State Office of Criminal Investigation. Law enforcement authorities questioned more than 250 people and seized 150 computers, various electronic equipment and data backups, three hardware wallets with keys to addresses with nearly a million dollars in crypto, as well as three cars, two luxury flats and 50 thousand euros in cash.

Europol

Here’s a quote from Europol’s press release on the matter.

The investigation suggests that the number of unreported fraud cases is likely to be much higher. This means that the illicit profits made by criminal groups with at least four call centres in Eastern Europe could run into hundreds of millions of euros.

The perpetrators were able to achieve “high returns” by gradually luring victims. First, they invested small amounts of hundreds of euros and received returns, and then they were “hyped up” for larger investments, stimulating interest with fake profits. According to Decrypt’s sources, most of the proceeds were laundered in Cyprus. Well, the victims ended up losing their own “investments”, while the scheme itself turned out to be a classic financial pyramid scheme.

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The BitConnect pyramid scheme, which ceased to exist at the end of the previous bull cycle, can safely take the top spot in the ranking of the most famous crypto scams. It has now been revealed that BitConnect victims will receive a total of $17 million in compensation. The US District Court for the Southern District of California issued a restitution ruling this week, with the relevant information soon to appear in a press release from the US Department of Justice.

BitConnect conferences have become a meme even outside the crypto industry

About 800 victims of BitConnect scams from 40 countries around the world will be able to receive a small portion of the $17 million in compensation. Unfortunately, this is still not enough to fully compensate all the losses caused by the crypto pyramid founders.


We believe that episodes like this clearly show how misunderstood the cryptocurrency industry is for many people. Still, they are willing to invest in coins after receiving calls from scammers, which alone should be suspicious.

However, pyramid schemes have always worked, so it is not surprising. Scammers use more popular topics to defraud, one of which is cryptocurrencies at the moment.