- CipherTrace confirms a drop in cryptocurrency crime last year.
- DeFi contributed the most to the incidents recorded in 2020.
A recent statement from CipherTrace, a cryptocurrency intelligence provider, has also confirmed a drop in the number of crimes that happened within the crypto space last year.
Many people are now aware of Ponzi schemes, which caused the most loss in the crypto market over the years. While, on a general note, the crime rate with cryptocurrencies dropped in 2020, decentralized finance (DeFi) made up the most crime recorded, from several protocol hacks and rug pull especially.
CipherTrace posts a 57% drop in crypto crime
According to the post, the losses incurred from crimes in the cryptocurrency market dropped by 57 percent in 2020, compared to the previous year. The crypto market lost about $4.5 billion in 2019; however, the figure reduced to $1.9 billion last year. Aside from the awareness about Ponzi schemes, CipherTrace explained that many platforms also beefed up their security systems to prevent attacks or hack.
During H1 of 2020, there was more increase in fraudulent investment or Ponzi schemes, followed by crypto thefts and ransomware attacks. Chainalysis recently made a similar publication, saying that illicit crypto transactions declined from 2.1 percent to 0.34 percent from 2019 to 2020. However, illegal transactions emanating from ransomware attacks surged by 311 percent.
DeFi recorded the most crime in 2020
As per CipherTrace, the majority of the incidents that occurred in 2020 were from decentralized finance protocols. Almost 99 percent of the crime that happened in H2 of 2020 stemmed from hacks and exit scams, especially rug pulls. Cryptopolitan reported several incidents about the exploit of DeFi protocols.
“Thefts from hacks against centralized exchanges continue to decrease as these financial institutions mature and adopt stronger security measures,”
However, 2020 saw a surge in decentralized finance-related crime, the majority of which were “rug pulls,” the chief executive officer at CipherTrace, Dave Jevans, said.