2021 has been another bull market for cryptocurrencies. Unsurprisingly, billions of dollars flowing into an unregulated market have attracted plenty of scammers too.
Besides the risks of theft from platforms and crypto wallets, 2021 has seen a rise in DeFi scams and theft events. While DeFi (theoretically) provides protection against some risks, it also introduces new and complex risks, and we’ve seen hundreds of millions stolen from DeFi platforms in 2021. 71% of major hacks in 2021 were on DeFi platforms.
This report is based on a survey of about 2500 users of walletrecovery.info, which has helped thousands of customers recover their cryptocurrency wallets since 2017. While we cannot help victims of crypto scams recover their funds, we want to share our findings to improve awareness of common scams in this space and provide guidance for the security of crypto assets.
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Key Findings:
- Fake investment platforms were the most common scam (32%), with Bitcoin the most common asset stolen (66%).
- Fake platforms and scammers employ sophisticated techniques like stealing identities of legitimate financial professionals, catfishing romance scams, and elaborate fake trading and gambling platforms.
- 57% of victims filed a report with law enforcement, but 69% did not get a personal response, and only 8% felt that law enforcement took their case seriously. None got their crypto assets back.
- 60% of victims blame insufficient education for falling for the scam, 19% blame their poor security practices, and 7% blame a crypto service provider.
- Only about 10% of victims thought that crypto institutions were doing a good job of educating customers about scams.
- Common signs of scams: unrealistic returns, high-pressure tactics, sales pitches via Telegram, no mention of fees, & lack of reputation.
- Fake “scam recovery” services abound and are sophisticated as well, using complex techniques such as sending stolen funds from other victims to collect their “fee” before the bank transfer bounces.
Note: The original PDF download from The Bitcoin Consultancy is no longer available; the key findings are summarized above.