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- In a recent report by Chainalysis, it was noted that more than $7.7 billion worth of cryptocurrency was stolen or frauded from victims.
- Of which seemingly significant worth of $2.8 Billion was through rug pulls mostly occurring in DeFi ecosystems.
- The crypto sphere has grown into a phase where scams & prices aren’t correlative anymore.
While it has been a crazy year for cryptocurrencies in regards to value, prices & regulations. It also has one more tangent left to be addressed, according to a report by chainalysis the scam revenues in 2021 has outgrown all of its previous year’s benchmarks. Apart from major cryptocurrencies rallying themselves into their all time highs, revenue from scams around the same have also peaked into their all time high.
Scams were once again reported to be the highest crypto based crime by transaction volume with over $7.7 billion worth of cryptocurrency stolen from victims this year alone, the same reports a rise of 81% in 2021 contrast 2020, the year in which scams significantly dropped in percentage compared to 2019.
The whole scenario of the background changed with Finiko, a ponzi scheme primarily preying on Russian speakers around the eastern Europe, knuckling out $1.1 billion from victims. Another major contributor to such soughts was the rise of rug pulls.
Rug pulls
The definition of rug pull is arbitrary as of now like much of the terminology associated with the crypto sphere. Generally, it summarises the cases in which new tokens or sometimes even exchanges are created & pitched to investors, where victims in anticipation of a rally leverage themselves onto the token, thereby launching the project with liquidity. In rug pulls, the developers drain the liquidity consequently sending the value to null & disappear.
Rug pulls have become quite known in the world of scams, particularly in the DiFi world, accounting for almost 37% of all scams in 2021 contrasting to 1% in 2020. In total the rug pulls have contributed $2.8 billion worth to scam revenues.
Majorly, the biggest rug pull of the year was by a large Turkish centralized exchange named Thodex, whose CEO disappeared after the exchange halted its users ability to withdraw their funds, while the victims took a hit of more than $2.6 Billion representing 90% of all value in rug pulls.
While the scam revenue increased significantly in 2021, the total scams aside from rug pulls stayed flat while the number of scam addresses fell from 10.7 million to 4.1 million. Once such a reason for the same could be more regulations & investigations taking place by the government & its bodies.
Scams generally come in waves when the token prices are soaring to new highs, attacking new users, who aren’t tech savvy or well aware of malicious activities in contrast to seasoned investors. However the report also pointed to the end of a large correlation between asset prices & the scamming activity. Lastly, in order for cryptocurrencies to be accepted by the people it is important for its stakeholders, investors & enthusiasts to make sure of it’s consolidated security. In future such scams are expected to decrease with more regulations & vigilance.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
