TRM Labs Reveals $7.8 Billion In Losses In 2022

Crypto scam continues to plague the world of digital currency assets, attracting unsuspecting investors with promises of incredible returns. The year 2022 saw a significant rise in the prevalence of these fraudulent schemes, with a massive $7.8 billion being paid out to cryptocurrency pyramid and Ponzi schemes globally, as revealed in a report by blockchain intelligence firm TRM Labs. 

Among these deceptive practices, Ponzi schemes have emerged as a particularly destructive form of crypto scam, wreaking havoc on individuals and the wider financial ecosystem.

Despite the plummeting cryptocurrency prices during the ongoing bear market, it is evident that crypto-related crime has not experienced a proportional decrease.

Notorious Players In The Crypto Scam Scene

In 2022, two prominent crypto Ponzi schemes, Forsage and Trade Coin Club, came under legal scrutiny for their fraudulent activities. Forsage enticed investors by offering them substantial returns through Ethereum and BNB Smart Chain contracts. Operating through two related entities, this scheme managed to amass nearly $974 million from unsuspecting individuals. 

On the other hand, Trade Coin Club lured over 100,000 investors by promising lucrative profits through its cryptocurrency exchange. However, the scheme collapsed after raking in more than $295 million. In response to their deceptive practices, both Forsage and Trade Coin Club faced sanctions from the United States Securities and Exchange Commission.

Bitcoin halfway to the $31K level. Chart: TradingView.com

Researchers investigating crypto Ponzi and pyramid schemes in the TRM Labs report discovered that 10 of the largest schemes accounted for approximately 54% of the total amount involved in such fraudulent activities.

Additionally, it was revealed that a significant portion of the investment fraud schemes in 2022 targeted the Tron blockchain, with a staggering 40% of the total incoming investment volume being attributed to this platform. 

This increase in fraudulent activities on Tron was predominantly facilitated through Tether (USDT), a stablecoin issued on the blockchain. Comparatively, in 2021, Tron’s involvement in investment fraud schemes amounted to just 17% of the total volume.

Crypto Scam: The Allure Of Quick Wealth And FOMO

Despite the repeated warnings and increasing awareness about the risks associated with crypto Ponzi schemes, people continue to fall victim to these fraudulent schemes. 

Crypto Ponzi schemes often promise extraordinary profits within a short period, tapping into people’s desires to make substantial gains in the volatile cryptocurrency market. The fear of missing out (FOMO) on these potential profits drives individuals to invest without conducting thorough research or due diligence.

In addition, the complex and technical nature of cryptocurrencies can be intimidating for many people. Crypto scam perpetrators take advantage of this lack of understanding and exploit it by presenting their schemes as innovative investment opportunities that only a select few can access.

They create an illusion of exclusivity, making potential victims believe that they are part of an exclusive group of early adopters who will reap immense rewards.

Experts warn it is crucial for individuals to educate themselves about the risks involved in a crypto scam, remain skeptical of unrealistic promises, and seek advice from reputable sources before investing their hard-earned money in any cryptocurrency venture.

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