Scams still the most popular criminal activity via cryptocurrency

Research published by a blockchain analyst from Chainalysis has shown that the ferocity of scams outweighs other illegal activity conducted via cryptocurrencies.

The data provided shows that scams accounted $8.6 billion worth of transactions. More shockingly, the majority of this was made up by 3 separate large-scale Ponzi schemes.

2019 was a year in which the light was shone on many of the largest cryptocurrency scams in the industry. Jamie Bartlett’s gripping podcast on BBC Sounds, “The Missing Cryptoqueen” showed how a Ponzi scheme named OneCoin was able to fleece investors for over $4 billion.

In more recent months there have been accusations that the recent downturn in the price of Bitcoin is due to the sell off by the leaders of the PlusToken Ponzi scheme, which largely operated out of Asia.

How do these scams spread?

Clearly, cryptocurrency has proved fertile ground for scams to proliferate. The lack of understanding of the technology coupled with the astronomic price rise of cryptocurrencies in the past ten years has created the ideal environment for Ponzi schemes to occur.

There are further underlying issues within the cryptocurrency community. The idea of Bitcoin maximalism, while some people may see it as noble, causes confusion amongst the general public who are not as knowledgeable.

Jamie Bartlett highlighted this point when appearing on Peter McCormack’s “What Bitcoin Did?” podcast. Bitcoin maximalists are famous for calling everything other than Bitcoin scams. However, in doing so people are then unable to decipher what is and what isn’t a Ponzi scheme. When everything is a scam, it hides the real ones in plain sight.

Other crimes

Coming second to scams in Chainalysis research is cryptocurrency users having their funds stolen, followed by the use of Darknets. Although there has been a heavy crackdown on the Darknet markets since the prominence of The Silk Road, it is clear the legal authorities are still struggling to contain such markets.

Terrorist financing and child abuse material are two other areas Chainalysis focussed on, yet these are considerably less prominent than the other criminal activities mentioned. However, within the media, particularly mainstream press this is the most concentrated upon.

Conclusion

There are new scams appearing consistently in the cryptocurrency industry suggesting that there is still not enough education nor awareness of how they proliferate. Unfortunately, this would suggest that many more people are going to succumb to the promises of great wealth and sadly lose their money.

More needs to be done by not just the cryptocurrency exchanges but by the wider community to protect such people and stop these scams from delegitimising the cryptocurrency industry.