US, China, and UK Lead in Scam and Failed Crypto Project Launches: Report

A recent report by 5Money and Storible has highlighted that a significant proportion of cryptocurrency scams and failed projects originate from just a few countries, with the United States, China, and the United Kingdom leading the pack. The study, which analyzed data from 1,544 crypto projects launched globally between January 2022 and October 2024, reveals alarming trends regarding the prevalence of scams and failed projects within the industry.

US Leads in Crypto Scams and Failed Projects

The United States tops the list of countries with the highest number of scam crypto projects, with American founders behind 43% of all scams. This is largely attributed to the sheer volume of crypto projects launched in the U.S., coupled with high-profile incidents such as the collapse of the FTX exchange in 2022. The report suggests that the high number of crypto projects launched in the U.S. has also contributed to the high percentage of failed ventures, with 33% of all global failed projects originating from American developers.

Following the U.S., China and the United Kingdom account for 8% and 7% of the world’s scam projects, respectively. These countries are also prominent players in the crypto space, but the data highlights that the scale of projects in these regions is often coupled with significant failures.

Scams and Failed Projects More Common in High-Growth Markets

The study reveals an interesting pattern: scams and failed projects tend to be more common in countries with strong market growth. This is due to the high levels of interest and investment in crypto markets, which unfortunately attract both legitimate and fraudulent actors. With markets growing rapidly, the opportunity for scams and project failures increases, especially in nations like the U.S., China, and the UK, where the crypto industry has been highly active.

Russia, Switzerland, and China: High Scam Rates

When the researchers compared the proportion of scam projects to the total number of projects launched, Russia emerged as the country with the highest rate of scam crypto projects. Analysts concluded that 24% of all crypto projects launched by Russian developers were scams. Switzerland followed closely behind with 22% of its projects deemed fraudulent, while 20% of projects launched by Chinese developers were flagged as scams. Vietnam also made it to the top ten, with 12% of its crypto projects being identified as fraudulent.

South Korea Leads in Failed Projects

In terms of failed projects, South Korea ranks highest, with 59% of its total crypto projects classified as dead. Despite a smaller overall number of crypto projects launched, South Korea has one of the highest failure rates in the industry. Singapore follows closely with a 54% failure rate, and over half of the crypto projects launched in the United Kingdom also failed. Other countries with significant failure rates include Canada, the Netherlands, and Vietnam, which all recorded high percentages of dead projects, with Vietnam seeing 42% of its projects fail.

Need for Global Standards and Stricter Regulations

The report stresses the need for global standards and more stringent regulations to address the growing issue of scams and failed projects in the crypto space. While the crypto industry has seen exponential growth over the past decade, the lack of regulation in many countries has left investors vulnerable to scams, fraud, and failed ventures. The study calls for stronger oversight to protect investors and ensure the long-term sustainability of the crypto industry.

Governments and regulators around the world have already begun tightening their grip on the crypto sector. For example, the UK’s Financial Conduct Authority (FCA) plans to finalize crypto regulations by 2026. In addition, countries like Singapore and South Korea have introduced strict consumer protection measures to ensure that investors are better shielded from fraudulent schemes and failed projects.

Lessons from the 2020-2021 Crypto Boom

The findings in this recent report are consistent with a February 2024 study by AlphaQuest, which revealed that over 70% of crypto projects launched during the 2020-2021 bull run were reported as dead by early 2024. The majority of these projects were shut down shortly after the collapse of FTX in late 2022, highlighting the impact of major industry events on the wider crypto market. The period between 2020 and 2023 was one of the most volatile in the history of crypto, with almost 60% of failed projects vanishing during 2023, primarily due to low liquidity and trading volumes.

The findings of this report highlight the importance of regulating the crypto space to prevent scams, fraud, and project failures that hurt investors and tarnish the reputation of the industry. While the U.S., China, and the UK lead in the number of scams and failed projects, it is clear that global regulations are urgently needed to ensure the integrity and sustainability of the crypto sector. As governments around the world implement more robust regulations, the hope is that they will create a safer environment for investors and foster long-term growth in the industry.