Crypto, NFT Losses Estimated to Reach $25 Trillion, Industry Researcher Says

In the wake of recent hyperactive fluctuations, the market for cryptocurrency and non-fungible tokens is believed to have exploded to more than $3 trillion held by over 300 million people worldwide.

However, the current size of the market represents only a fraction how much has been lost in recent years, according to at least one well-known industry analyst. Recent findings suggest that “a whopping $25 trillion and counting has been lost to cryptocurrency and NFT scams and scams to date,” according to a recent post by Rebecca Moody, head of data research for Comparitech.

“As our cryptocurrency and NFT heist trackers have found, crypto is a lucrative business for hackers,” Moody pointed out. “However, these trackers do not take into account insider trading and fraud, such as Ponzi schemes.”

Therefore, the researcher has created new tracking systems to count so-called “rug pulls” and fraud, which are usually not included in this loss account.

Rug pulls include losses within “both newly founded crypto-tokens or NFTs, where the founders pull out before the project is fully built, as well as end fraud from long-running and more established projects,” according to Moody, who outlined her assessment in a blog post earlier this month and updated it Aug. 24. The $25 trillion loss estimate also covers fraud that is operated by Ponzi schemes, honeypots and masquerading as other types of digital currency.

But how could crypto losses have topped the gross domestic product value of many countries over the years without attracting so much attention, not to mention more intervention? Or, more accurately, why is loss so severely undervalued according to Moody’s evaluation?

“From the research we’ve done, a lot of the fraud for lower amounts or lesser-known tokens or NFTs goes under the radar and isn’t reported much, if at all,” she pointed out in an interview. She added that some of these low-profile attacks “may only show up in tracking tools like those offered by PeckShield and Certik.”

Therefore, Comparitech sought to collect information on as many of these seemingly low-value scams as possible “along with all the well-known ones, it has given us a clearer picture of the true extent of the problem.” And yet, despite the incredibly high number of crypto losses to date, Moody said the estimate still may not be all-inclusive.

“It is likely that there are others that have not been reported at all,” she pointed out.

“I think there’s still a lot of confidence in crypto and NFT as an investment, especially since it’s still a relatively new industry and as it’s become far more ‘mainstream,'” she said in an interview. “There’s also a lot of demand for bigger regulation, which will increase confidence.”

And on the other end of the spectrum, a few recent individual robberies are off the charts. Case in point: Nomad Bridge was recently taken for more than $190 million in the third largest crypto heist of 2022 and the ninth largest of all time (so far). And the losses are likely to increase as the embrace of digital currencies grows. Worldwide crypto adoption grew nearly ninefold (880%) in 2021, according to Blockware Intelligence.

The biggest crypto scams and scams of all time (per Comparitech)

Below are the biggest crypto-blanket moves and scams (based on the amount in US dollars stolen at the time of the attack) to date: