LibraryblogWhat happened with fraud and crypto in 2021?

What happened with fraud and crypto in 2021?

We published our 2021 Fraud Report in early December, and it's time to take a closer look at the impact online identity fraud had on the crypto industry throughout last year.

A header image for the blog announcing Veriff's 2021 Identity Fraud Report.
Ashley Nelson
January 6, 2022
Blog Post
Fraud Prevention

​​Veriff rang in the new year by publishing its 2021 Identity Fraud Report (and it’s available to download now). Our fraud report looks mainly at three major industries: Crypto, Fintech, and Mobility. All of these industries have been affected by COVID-19, rapidly changing economic landscapes, the Metaverse, and more. Today we’re taking a look at how fraud rates have changed across the crypto space over the last year. 

The year in Crypto 

Last year was fraught with massive news in the crypto space, altering the business environment across sectors. The blockchain-enabled cryptocurrencies’ market cap surpassed $3 trillion, and globally more than $20 billion was invested across crypto products through November. Additionally, the first U.S. exchange-traded fund tracking Bitcoin launched, changing the crypto space in the United States and expanding its already massive reach. 

How did fraud affect crypto in 2021? 

The cryptocurrency market continues to see rapidly rising rates of fraud — causing concern for the industry at large. Cryptocurrency crimes have increased 24,000% from 2016, according to Forbes. Veriff has kept its finger on the pulse, and monitored the trends in cryptocurrency fraud and where businesses should put their resources to prevent it. 

The most common type of fraud in crypto has been recurring fraud — where bad actors return to the same accounts and users after defrauding them successfully in the past — followed by identity fraud, and document fraud. 

Recurring fraud breaks down into two types; one type is when a fraudster has been successful at defrauding a user or customer and comes back to try again, and the second type is velocity abuse, where fraudsters abuse the system to get approved as many times as possible. 

On average, 2021 saw more cryptocurrency fraud than 2020, and rates steadily rose until they peaked in June. The U.S. experienced more fluctuations in crypto fraud rates, seeing a notable uptick in fraud after the price of Bitcoin increased in March — the EU saw an increase but it was not as severe. The EU, while also seeing rates peak in June, were more stable than in the United States. 

Where does Veriff come in? 

Amid the volatility of both the crypto market, federal regulation, and an ever changing economic picture, having identity verification is vital to the crypto industry. As the economy shifts with crypto, keeping up with strict compliance requirements is vital to reducing fraud and keeping the industry — and industries that rely on the blockchain — afloat. 

To better understand how Veriff protects businesses and their customers, read about our crypto identity verification process. Additionally, Veriff’s AML and KYC solution helps fight financial crimes by ensuring customers are who they say they are.