At least $30B in damage from cryptocurrency crime in 2017-2022, study shows

GENEVA

Cyberattacks and fraud involving cryptocurrencies have caused at least $30 billion in damage worldwide since 2017, according to a new study published on Monday.

Citing technical weaknesses and manipulated cryptocurrencies as the main causes behind the losses, researchers at the Vienna-based Complexity Science Hub documented a total of 1,155 cryptocurrency-related criminal incidents in 2017-2022.

These included 16 cases in the first year of the study, which proliferated to 435 cases in 2022, according to the study, conducted in collaboration with the University of Montreal and released on Complexity Science Hub's website.

"However, this does not mean that there cannot be more cases. Accordingly, all our results are minimums," Bernhard Haslhofer, head of the Cryptofinance research group at the Complexity Science Hub, said in a press release.

By far the largest documented loss is $3.6 billion and can be traced back to Africrypt, a centralized financial platform based in South Africa.

The founders are suspected of having gone underground with $3.6 billion worth of bitcoin in June 2021.

A new project by Complexity Science Hub called "DeFi Trace" should make it easier to trace stolen funds in the future.

The focus is primarily on decentralized finance (DeFi), a form of financing that does not rely on central financial service providers like brokers, exchanges, or banks, but is instead based on blockchain, a digital financial technology that uses multiple shared ledgers.

In their new project, the researchers want to develop methods that enable automated tracking of illegal payment flows in the DeFi sector.

The project's sponsors include three Austrian ministries and the law enforcement authorities of the German state of Bavaria.