Crypto Scams and Ransomware Activity on the Rise in Eastern Europe, Chainalysis Report
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Crypto Scams and Ransomware Activity on the Rise in Eastern Europe, Chainalysis Report

11 months ago

According to Chainalysis, Eastern Europe has the highest rate of exposure to illicit crypto addresses, second only to Africa.

Crypto Scams and Ransomware Activity on the Rise in Eastern Europe, Chainalysis Report
On Sept. 1, blockchain analytics firm Chainalysis unveiled a preview copy of its 2021 Geography of Cryptocurrency report. The latest report evaluates the level of cryptocurrency crime in Eastern Europe in comparison with other regions, including Western Europe, Africa, North America and Latin America. In total, it measures the share of illicit crypto exposure in eight global regions; with a focus on the value of cryptocurrencies linked to illicit addresses.

According to Chainalysis, Eastern Europe has the highest rate of exposure to illicit crypto addresses, second only to Africa. However, considering its much larger cryptocurrency economy, the region is undoubtedly ahead of Africa in terms of sheer size.

“Eastern Europe is the only region with a total transaction volume of $400 million or more for which illicit activity makes up more than 0.5% of total cryptocurrency value sent and received.”

It is worth mentioning that in terms of raw value, Western Europe is currently leading the pack, with nearly $1.5 billion linked to illicit addresses.

Crypto users in Eastern Europe sent more funds to darknet markets than any other region. The report suggests this is largely due to the region’s involvement with Hydra Market, the world’s biggest darknet market that caters to users in Russian-speaking countries.

In all the regions, crypto scams accounted for the biggest share of funds sent to illicit addresses. In the case of Eastern Europe, Chainalysis noted that crypto users sent $815 million to scams between June 2020 and July 2021. The region also sent the most web traffic to scam websites, surpassing users in Central and Southern Asia, Western Europe and Africa.

Speaking of scams, more than half of the funds sent from Eastern Europe went to the pyramid scheme Finiko. "Between December 2019 and August 2021, Finiko received over $1.5 billion worth of Bitcoin in over 800,000 separate deposits."

The Russia-based Ponzi scheme, which promised monthly returns of up to 30%, collapsed in July 2021. Consequently, users were unable to withdraw their Bitcoin and Tether investments in the company. Although earlier reports suggested that customers lost about $95 million, Chainalysis’s $1.5 billion figure, if true, could position Finiko as one of the largest crypto scams ever. OneCoin and Bitconnect famously swindled unsuspecting victims of $5.8 billion and $3.5 billion, respectively.

Chainalysis further claims that users in Russia and Ukraine were predominantly affected by the Finiko scheme.

In addition to losing a lot of money to scams, Eastern European addresses also received “a great deal of funds from scam addresses.” This suggests that Eastern Europe is home to many scam operators. Users in the region have received roughly $950 million worth of cryptos from scam addresses over the past year. And although Western Europe is ahead of Eastern Europe in this regard, the latter’s monthly total has steadily increased since March 2021.

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