Scam Victims Still Face Alarming 72.5% Unrecovered Losses, Reaching $483.5M
August 2023 by Elizabeth Kerr
A new BanklessTimes.com report details the havoc that scammers continue to wreak on the cryptocurrency sector. The site has presented data indicating that crypto investors lost $667M to different scams in H1’23.
Crypto Scams Are an Indictment of the Sector
Weighing in on the matter, BanklessTimes’ cryptocurrency expert Alice Leetham, held that the exploits are a stern indictment of the crypto sector’s security infrastructure. To her, it is concerning that nearly half a billion dollars are lost with no hope of recovery.
Alice observed that the sector must take significant steps to improve its security and mitigate such losses. She explained:
The continued loss of funds through crypto scams is deeply troubling. It highlights the urgent need for better security measures and increased awareness among investors. Implementing better tracing and recovery mechanisms is crucial in safeguarding users’ assets and bolstering their confidence in this space.
A Glimmer of Hope
But amidst the gloom, BanklessTimes’ presentation provides a glimmer of hope. It shows that the losses amounted to $204M in Q2 ’23, a 99% from $40B in Q2 ’22. This decline could be due to the crypto community’s proactive measures to combat scams.
Moreover, it disclosed Atomic Wallet, Fintoch, and MEV Boost exploits as the most notable scams of that time. These collectively caused a loss of $92.8 million, with the Atomic Wallet scam alone accounting for $35 million. The Fintoch and MEV Boost exploits added losses of $31.6 million and $26.1 million, respectively.
Meanwhile, Access Control, Exploits, and Rugpulls are the most prominent scamming means. The former amounted to a whopping $75 million in losses, while the latter two added $55.3 and $47.3 million, respectively.
How Can We Combat Crypto Scams?
Alice suggests combating this menace calls for collaboration between industry experts and regulators. These must work together to establish strict regulations and bolster investor education, apt deterrents to bad actors.
Additionally, crypto projects must implement robust security protocols, including two-factor authentication, encryption, and regular security audits. Timely updating and patching vulnerabilities will deter scammers from exploiting platform weaknesses.
Crypto investors should also educate themselves on the common scams and the red flags of fraudulent schemes. Conducting thorough due diligence before investing in any project will help them avoid falling prey to con projects.
Finally, there’s a need for the crypto community to maintain the vigilance required to detect and report suspicious activities promptly. They could incentivize users to report potential scams to protect the wider community.