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December 28, 2021

Review: $9.8 Billion Was Lost to Crypto Frauds This Year

The year 2021 will undoubtedly be remembered as the year when institutions finally acknowledged that cryptocurrency is not a fad but rather a viable alternative financial sector. However, as interest and usage increased, the number of security breaches and hackers increased as well. Crypto criminals managed to get their hands on a massive $9.8 billion USD stolen in different breaches and ransomware assaults, according to the latest data from Slowmist.

Ponzi schemes and rug pulls were the two most common forms of scams in 2021, accounting for more than 80% of total frauds. Due to the growth in the value of cryptos and the introduction of faster and faster technology, blockchain-based frauds have had a shorter execution lifespan, with fewer individuals being ripped off big sums of money, according to a Chainalysis research.

The average longevity of scams is two and a half months in the 2021 study, compared to the six-month maturity period it took to finish a fake last year.

According to the annual study by Slowmist, there were a total of 231 hacks and security breaches in the crypto ecosystem, with 171 of those events coming from various defi protocols. While the Defi ecosystem has evolved to be one of the most well-known in the crypto world, it is also one of the most misused. There hasn’t been a single week in the last year when there hasn’t been some form of security violation.

Due to the anonymity factor, the decentralized nature of the blockchain has made it nearly impossible for hackers to launder money out of the systems. It is also important to note that some of the biggest heists in crypto were eventually returned due to the decentralized nature of the blockchain, which made it nearly impossible for hackers to launder money out of the systems. PolyNetwork, the largest Defi attack to date, was a classic illustration of this, with hackers gaining access to assets valued more than $600 million.

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The protocol notified all exchanges and stablecoin issuers of the hacked address, which resulted in the freezing of all stablecoins and the banning of all transactions from that account. As a result, the hacker had no choice but to return the money and instead get a white hack reward.