What are Crypto Scams?
Crypto scams or hacks are often malicious schemes designed to rob crypto users of their assets. Crypto scams can be as simple as giveaways or as complicated as DeFi rug pulls.
According to Chainanalysis’ 2021 Crypto Crime report, illegal wallet addresses received up to $14 billion in 2021. That is nearly an 80% increase from the $7.8 billion in 2021.
Most times, crypto scammers aim to get access to user’s private information or to trick them into sending crypto assets into compromised digital wallets.
The problem with crypto scams is that the stolen funds are often almost impossible to trace due to the privacy and decentralization of blockchain technology.
DeFi Scams
DeFi scams are elaborate schemes designed for the DeFi (Decentralized Finance) space. Like other crypto areas, DeFi is also vulnerable to fraud and crime; the space has seen an enormous growth of scams in the last year.
But, this growth has also attracted the attention of scammers and malicious actors. A report by Elliptic, a blockchain analytic firm, reported that over $10 billion were lost in DeFi scams between January to November of 2021.
The main reason is that policing DeFi poses a bigger challenge due to the complete decentralization. There are no regulators to enforce and prevent scams because users are in control of their assets. Besides, the rapid growth in the DeFi sector has attracted the attention of various people, including malicious actors.
For example, flash loans – a type…
