$7.8B lost in cryptocurrency pyramid and ponzi schemes in a year

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  • Cryptocurrency pyramid and Ponzi schemes edged out with a staggering $7.8 billion in 2022, according to TRM Labs
  • Investment fraud involving cryptocurrency rose by almost 200% from $907 million in 2021 to $2.57 billion in 2022
  • Forsage and Trade Coin Club were among the largest crypto Ponzi schemes prosecuted, collectively accumulating over $1.2 billion

According to a recent report by blockchain intelligence firm TRM Labs, an estimated $7.8 billion was paid to cryptocurrency pyramid and Ponzi schemes globally in 2022. Additionally, TRM alleged that another $1.5 billion worth of cryptocurrencies was spent on darknet platforms. This was for illicit activities, while approximately $3.7 billion was lost in hacks and exploits.

TRM Labs claims that a staggering $9.04 billion in cryptocurrency was funnelled into various forms of financial fraud schemes. Surprisingly, despite the ongoing bear market and the decline in cryptocurrency prices, crypto-related crimes have not shown a corresponding slowdown.

The report highlights investment fraud, which includes fraudulent ICOs, unregistered securities, and deceptive investment platforms. The fraud saw a significant increase of nearly 200%. This was from $907 million in 2021 to $2.57 billion in 2022. In addition, TRM Labs emphasizes that 10 of the largest crypto Ponzi and pyramid schemes accounted for approximately 54% of the total amount.

READ: Five things you must know before buying your first cryptocurrency

Interestingly, Tron, a blockchain platform, played a significant role in investment fraud schemes. It carries an alleged 40% of the total incoming volume of such schemes in 2022 occurring on the Tron network. Moreover, most of these fraudulent activities were facilitated through Tether, a stablecoin issued on the Tron blockchain. This represents a notable increase from the 17% seen in 2021.

Among the notable Ponzi schemes prosecuted in 2022, Forsage and Trade Coin Club stand out. Forsage enticed investors with promises of high returns through Ethereum and BNB Smart Chain contracts. Moreover, managing to accumulate nearly $974 million from investors through two related entities. On the other hand, Trade Coin Club claimed to offer substantial returns through its cryptocurrency exchange. They amassed over $295 million from more than 100,000 investors before its collapse. These firms have since faced sanctions from the United States Securities and Exchange Commission.

The prevalence of such large-scale cryptocurrency scams raises concerns about security and regulatory oversight within the industry. The lack of investor awareness and the allure of quick profits continue to make individuals vulnerable to fraudulent schemes. Investors must conduct thorough due diligence and exercise caution before engaging in any investment opportunities, especially within the cryptocurrency space.

READ: Common cryptocurrency pitfalls you should not overlook when trading

To combat cryptocurrency-related fraud, regulatory bodies and law enforcement agencies worldwide must enhance their efforts in monitoring and investigating suspicious activities. Increased regulation and enforcement actions can act as deterrents and help protect investors from falling victim to fraudulent schemes.

Furthermore, the cryptocurrency community as a whole should prioritize education and awareness initiatives. This will help empower individuals with the necessary knowledge and tools to identify potential scams and make informed investment decisions. By fostering a culture of responsible investing and promoting transparency, the industry can work towards mitigating the risks associated with cryptocurrency fraud.

In conclusion, the TRM Labs report sheds light on the alarming amount of funds flowing into the cryptocurrency pyramid and Ponzi schemes, as well as the use of cryptocurrencies in illicit activities and the losses incurred through hacks and exploits. The surge in investment fraud schemes demonstrates the pressing need for increased regulatory measures and investor education to safeguard individuals and foster a more secure cryptocurrency ecosystem.


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Nathan Sialah
Nathan Sialah
Nathan Sialah is a seasoned journalist with a diverse background in digital journalism, radio broadcasting, and cryptocurrency trading. With over five years of experience in the field, Nathan has honed his skills in delivering accurate and engaging news content to a wide audience. In addition to his journalistic expertise, Nathan is a dedicated researcher in the Artificial Intelligence industry, keeping abreast of the latest advancements and trends. His multifaceted background allows him to bring a unique perspective to his reporting, covering a wide range of topics with depth and insight.