Record number of crypto scams in Eastern Europe

According to a report by analyst firm Chainalysis, $815 million in crypto was sent to scam projects from Eastern European countries over the past year (July 2020 to June 2021). This figure would represent 0.5% of the total value sent and received in the area.

The map of online scams 

Eastern Europe, according to this analysis, would rank second in this uninspiring ranking of online scams.

“Between June 2020 and July 2021, Eastern Europe-based addresses sent $815 million to scams, second only to Western Europe”, reads the analyst firm’s report.

Chainalysis and the ranking of crypto scams

Crypto addresses in Eastern European countries have the second-highest rate of exposure to illicit addresses, with Africa topping the list and Latin America in third place, 

Looking at the report in more detail, Ukraine is said to be the country with the highest amount of web traffic used for this type of scam, with more than double the traffic of the second-largest country, the United States. 

The record-breaking Russian Finiko Ponzi scheme

The report also points out that of the approximately $815 million in fraud, more than half ended up in the so-called Russian Finiko scheme, which collapsed in July after swindling about $1.5 billion worth of Bitcoin over two years.

It was one of the largest cryptocurrency Ponzi schemes in history that promised investors 30% in Bitcoin or Tether. 

It was immediately successful since its launch in 2019, especially in Russia and Ukraine. In December 2020, Finiko then thought it best to also launch FNK, its native digital currency, listed on many cryptocurrency exchanges.

On 20 August, Moscow police arrested the founder of the scheme, Kirill Doronin, after the platform collapsed in July, with hundreds of users having their accounts wiped out. 

It is estimated that more than 800,000 people may have been scammed and the losses could be as high as $4 billion.

Scams, a growing phenomenon in the crypto world

Online cryptocurrency scams are a growing phenomenon worldwide. 

In Australia, scams have doubled in the first six months of the year compared to the same period last year. 

According to a recent report by the Federal Trade Commission (a kind of American consumer union) since October 2020, cryptocurrency scam numbers have literally skyrocketed, with around 7,000 people reporting losses of over $80 million. 

Their average reported loss was around $1,900. Compared to the same period last year, this is about twelve times the number of reports received by the federal agency and almost 1,000% more in terms of reported losses.

Among the most popular types of scams, the agency points to so-called “giveaway scams”, sponsored by celebrities, influencers of various kinds or prominent cryptocurrency figures, which promise to instantly multiply the value of a particular cryptocurrency. 

But many people have reported that they later realized that they had sent their money directly to the wallet of a scammer. 

For example, people have reported sending more than $2 million in cryptocurrency to impersonators of Elon Musk in the past six months, who has long been endorsing the Dogecoin cryptocurrency.