Gogolook 2022 Annual Fraud Report : Cryptocurrency

Gogolook 2022 Annual Fraud Report : Cryptocurrency

Gogolook, a leading TrustTech brand, enhances global security with anti-fraud technologies and risk management services. As Web3 applications and innovations garner attention, they come with structural and fraud risks. By investing in a startup Chainsight, Gogolook also expands to anti-fraud efforts in blockchains. In 2022 Annual Fraud Report: Cryptocurrency released by Gogolook and Criminal Investigation Bureau, Chainsight also offers exclusive insights to remind cryptocurrency and virtual asset investors.


With skyrocketing investment losses, Chainsight: Cryptocurrency losses reached over US$100 billion last year, 17 times of those in the previous three years combined

As blockchain industries prospered, cryptocurrency market values worldwide also skyrocketed to US$2.7 trillion in 2021. According to Chainsight, a blockchain data analytics startup that was selected into Y Combinator in Silicon Valley last year, major investment losses and scams around cryptocurrency also grow significantly. Financial losses in 2022 were 17 times of those in the previous three years combined. In 2018, the Ponzi scheme of Plus Token and the rug pull of Thodex caused US$2.25 billion and US$2.6 billion of investment losses respectively. In May 2022, LUNA, one of the top ten cryptocurrencies, crashed in three days. It indirectly led to two bankruptcies in June and November: Singaporean cryptocurrency hedge fund Three Arrows Capital and the second largest cryptocurrency exchange in the world FTX. Each major incident triggered over US$10 billion of financial loss, and more than US$100 billion throughout the year. FTX founder Sam Bankman-Fried faced multiple charges on asset appropriation and fraud. Digital asset management platform Steaker in Taiwan was also jeopardized in the process, and its founder was put into custody for potential Banking Act violations. Multiple cryptocurrency organizations have filed for bankruptcy in a short timeframe after crises, so their circulation and investment risks have attracted attention from supervisory authorities in many countries.


Chainsight discloses ten cryptocurrency risk loopholes, in which phishing accounts for nearly 80%

Besides losses incurred by stablecoin structural design and governance loopholes, cryptocurrency frauds and security loopholes continue to happen under the radar via social media and messaging software. Chainsight includes criminal transaction data over ten years in its blockchain database, and utilizes AI to construct virtual asset trade risk forecast and identification services. It covers 10 public chains, over 300,000 curries, and NFT.

According to Chainsight statistics, phishing accounts for nearly 80% of frauds. Fraudulent domains are one of the most common tactics. With special domain names with cryptocurrency websites, it is very easy to be confused with similar domains in different orders or suffixes. Even for senior users, it is sometimes difficult to immediately evaluate the authenticity, whether wallets or exchange applications are downloaded from fraud websites, or wallet access is obtained through fraud websites. Fake identity is the second common tactic (17%). Scammers pretend to be official representatives from exchanges or cryptocurrency operators in emails, websites, social networks, or messaging software. They request for personal sensitive information, such as wallet backup phrases, API keys, private keys, and password reset authentication codes, to steal private assets. Based on various risk types, it indicates frauds and risks related to cryptocurrency are much more diverse and complex, compared to traditional investment. Examples include blackmail, smart contract loopholes, and NFT airdrops. Even though these cases are proportionally fewer, they can still create huge economic losses to investors.

As a guardian to blockchain trade security, Chainsight reminds users to take precautious measures to protect personal digital assets. Chrome extension Web3Check supported by Chainsight is available for free download to detect trading websites and cryptocurrency wallet addresses in real time. In the future, Chainsight will add warnings to exchange circulation. When abnormal cashflows happen to exchanges, Web3Check will inform users right away to protect digital assets in real time.

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