- Crypto thieves and crooks hauled in a record N5.810 trillion worth of Cryptocurrency in 2021 which happened mainly by breaking into blockchain platforms
- Decentralised Finance (DeFi) was mostly to blame as many scammers had access to loans which cut off middlemen and lawyers
- The scammers employed a trick known as 'rug pull' which builds investors confidence before making away with their money
The increase in Decentralised Finance (DeFi) in the crypto industry saw scammers haul in a record N5.810 trillion worth of crypto in 2021 alone.
A CNBC report says Data from Chainalysis, a platform that connects cryptocurrency transactions to real activities, says that most of the scamming happened by hacking blockchain platforms.
Chainalysis said losses were spiked by 79 per cent which is driven by theft and scams.
It was the greatest form of crypto-based crime in 2021, which is followed by theft, occurring mostly through hacking crypto-based businesses.
PAY ATTENTION: Join Legit.ng Telegram channel! Never miss important updates!
DeFi, the main culprit
Chainalysis said DeFi is a huge part of the story for both, as many try to dabble into the emerging segment of the crypto industry.
Chainalysis said in its annual Crypto Crime report that one of the most thrilling areas of the broader crypto ecosystem which presents tremendous opportunities to business owners and crypto uses alike is DeFi.
“But DeFi is unlikely to realize its full potential if the same decentralization that makes it so dynamic also allows for widespread scamming and theft.”
The wild world of DeFi
It is an increasingly growing segment of the crypto demand that seeks to cut out middlemen, such as banks and lawyers, from traditional financial transactions, like getting a loan.
DeFi substitutes traditional banks and lawyers with a piece of code known as a smart contract. It is written on a blockchain such as ethereum or solana and runs when some conditions are met, taking out the need for a central intermediary.
What experts think
Chief Investment Officer at Pantera Capital, crypto and blockchain-centric asset manager, Joey Krug, said the financial system is primarily funded around the globe with various terms and conditions attached to it.
From 2020, crypto theft rose by a whopping 516 per cent to N1.3 trillion worth of crypto. 72 per cent of this sum were stolen funds from DeFi protocols, reports CNBC.
Eighty-two per cent of losses came from scams amounting to N3.2 trillion worth of crypto.
More than N1.2 trillion of this came from a new but very well known type of scheme called ‘rug pull’ in which developers build what seems to be legitimate crypto projects before making away with investors money.
Resilient Bitcoin surges
Legit.ng reports that Despite global opprobrium, Bitcoin investors were all smiles on Friday as they went home with a N20.750 million price increase of the cryptocurrency in their kitty.
Report: It takes over N1 million to move a container from Apapa to Lagos mainland or it stays trapped
The cryptocurrency market resumed trading activities on Friday, December 24, 2021, on a great note with a market huge cap, gaining marginally at 0.42 per cent to stand at N992,000 trillion, after it rose above the N20 million mark with a gain of 0.26 per cent to trade at N21.50 trillion, according to a report by Nairametrics.
However, the exchange rate between the naira and the US dollar closed at N414.73 per dollar at the official Investors and Exporters window.