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- 1 Beosin revealed that cryptocurrency losses from rug pulls and scams are more than losses from DeFi projects in May.
- 2 According to a report on June 1, the firm said that during the month of May losses from rug pulls reached over $45 Million.
Rug pull is when anybody hypes a project like a cryptocurrency or NFT to attract a customer, and then, suddenly shuts down or disappears with the invested money. Liquidity theft is one of the most common ones.
On May 24, the largest rug pull loss amounted to $32 Million and was allegedly from the crypto project, Fintoch. The project is claimed to have been backed by investment banking Morgan Stanley. It promises a 1% daily interest for investment from users. However, the investors reported that they were unable to withdraw their deposits.
Rug Pulls and Scams Are Comparatively Rising
Limiting sell orders, pump and dump are some other types of rug pulls. Their hike has been calculated during the month of May by the blockchain firm security. This highlights the ongoing challenges faced in the crypto market.
Scams related to crypto include phishing, giveaway scams, investment scams, blackmail, extortion scams, and many more, all these together, contribute to the loss of cryptocurrency. According to the Federal Trade Commission (FTC) report, $1 Billion was lost in crypto between January 2021 and June 2022 due to such various scams.
Attacks on DeFi Protocols Declining
There have been 10 attacks recorded on decentralized finance (DeFi) protocols that summon $19.70 Million. This is comparatively lower than rug pulls losses. According to Beosin’s report in 2022, the DeFi projects received the major attacks. Amongst the 167 major security exploits, the DeFi projects had experienced 113 attacks.
Hackers go on to exploit protocols through smart contract exploitation done by creating flaws in the code of smart contracts used in the projects. This then goes on to allow the hacker to make changes in the protocol made by DeFi projects. Thus, allowing them to steal the user’s asset.
According to the blockchain firm security, the amount of DeFi loss in May reflected an 80% decline from the previous month. This could be used as a warning to everyone, stating how hackers are shifting their targets to ordinary users too now. The biggest DeFi platform attack in the month of May was of $7.50 Million on Jimbo’s protocol.
Beosin reminds all investors to stay alert against scams and also strive to be informed consumers. He mentions to also not use public chargers as hackers could potentially modify the outlets to inject any malicious program. Anti-fraud awareness is essential to avoid scams and frauds. According to the firm’s data, the hackers are shifting their targets from DeFi platforms to scams and rug pulls.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
