Paraguay is facing a growing crisis as a new Chain Retrieval report has exposed over $4 billion in crypto being moved through scam operations in the country. The report, published earlier this week, points to Paraguay as a rising hub for illicit blockchain transactions, with thousands of wallets involved and almost no regulatory oversight.
At the heart of the scandal are 2,523 unique wallet addresses linked to fraudulent schemes. These wallets are believed to be connected to a sprawling network of online investment scams, Ponzi-style token projects, and fake crypto mining firms promising high returns.
Chain Retrieval, a blockchain analysis firm, used advanced tracking tools to follow the money trail across multiple blockchains. The company reported that much of the stolen crypto has been moved into offshore exchanges and privacy mixers, making the funds almost untraceable.
Most of these scams target unsuspecting investors with promises of fast profits. Many victims reported being lured through social media platforms, fake celebrity endorsements, and phishing-style websites that mimicked legitimate projects. Some scams even offered referral bonuses, creating a viral effect.
“Paraguay has seen an alarming uptick in crypto-related fraud due to poor enforcement and lack of awareness,” said by CEO of Chain Retrieval. “The $4 billion figure is just the surface. There’s likely more hidden beneath the blockchain.”
Weak Regulations Fuel Cryptocurrency Scams in Paraguay
One of the major takeaways from the report is how Paraguay’s weak crypto regulations have created the perfect breeding ground for criminal activity. Unlike countries with strong regulatory frameworks, Paraguay currently lacks comprehensive laws for monitoring digital asset activity.
This vacuum has allowed bad actors to operate with minimal consequences. The report shows that even after funds were flagged as suspicious, many exchanges still processed transactions without proper Know Your Customer (KYC) checks.
The Paraguayan government, which has been trying to attract crypto miners due to its low electricity costs, now finds itself in a tough spot. What was once seen as a tech-friendly policy is now being criticized for opening the door to financial crime.
Local authorities have promised to investigate further and improve oversight. But experts believe it might take years to rebuild trust and secure the ecosystem unless immediate action is taken.
There are growing calls for Paraguay’s central bank and financial regulators to introduce clear anti-money laundering (AML) guidelines for crypto service providers. International watchdogs are also urging the country to cooperate more closely with global enforcement agencies.
Meanwhile, investors are being advised to stay alert and do proper research before putting money into any crypto project — especially those operating without a license or clear team details.