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According to a report released by analytics firm TRM Labs on June 28, $7.8 billion was paid out worldwide to crypto pyramid schemes and Ponzi schemes in 2022. illegal activity, while another $3.7 billion in crypto was lost through hacks or exploits.
In total, $9.04 billion in cryptocurrency was sent to all types of financial fraud schemes, according to TRM Labs. Despite the collapse in cryptocurrency prices due to the ongoing bear market, it appears that there has not been a corresponding slowdown in cryptocurrency-related crime. The firm wrote:
“Investment fraud focuses on raising funds for fraudulent investments or projects; they often include fake Initial Coin Offerings (ICOs), unregistered securities, or fraudulent investment platforms. Cryptocurrency investment fraud has grown by almost 200% from $907 million in 2021 to $2.57 billion in 2022.”
The ten largest cryptocurrency Ponzi and pyramid schemes account for about 54% of the total, the researchers said. Moreover, an estimated 40% of the total incoming volume of investment fraud schemes active in 2022 came from Tron, primarily through blockchain-issued Tether (USDT), compared to 17% in 2021.
In 2022, two of the largest cryptocurrency Ponzi schemes were initiated: Forsage and Trade Coin Club. Forsage lured investors in with the promise of high returns through Ethereum (ETH) and BNB Chain contracts, raising about $974 million in investor money through two related entities. Meanwhile, Trade Coin Club was claiming high returns from its cryptocurrency exchange, raising over $295 million from over 100,000 investors prior to its collapse. Both firms have since been sanctioned by the US Securities and Exchange Commission.