Crypto Crime: Over $20b lost to rug pulls and scams

09:39 - 29 August 2023

Financial Services

Crypto scams and rug pulls surged from 10 in 2017 to 364 in 2022, though there has been a significant decline in 2023, according to research by Comparitech.

However, scams and rug pulls – a crypto industry definition for when a development team suddenly abandons a project and sells or removes all its liquidity – have now made way for more elaborate Ponzi schemes and insider jobs; and exit scams.

Investors have lost over $26b in cryptocurrency and non-fungible token (NFT) heists to date. The year 2022 in particular saw an unprecedented wave of crypto heists, with hackers pocketing over $3.5b.

From a mere ten incidents reported in 2017, the number jumped to 364 in 2022 and currently stands at 162 for 2023. Although the value dropped from $4.3b to $1.2b in this period, it peaked in 2021, reaching a staggering $8.4b.

However, while the overall landscape is showing signs of improvement, one concerning trend is emerging: a surge in exit scams. According to a report by Certik, these scams, characterised by individuals or entities launching crypto projects, accumulating value, and then vanishing, doubled in impact during the second quarter of the year.

Furthermore, certain blockchain platforms have also been facing serious security issues, with relevant violations causing losses for companies like BNB Chain (100 incidents costing $71m), Ethereum (55 incidents leading to losses of $66m) and Polygon (four cases, $2.4m losses).

Bitcoin, on the other hand, has remained resilient. According to a report by Finance Magnates, Bitcoin’s decentralisation, proof-of-work consensus, and the immutability of the blockchain have enabled it to weather the storms of hacking attacks.

(Source: financemagnates.com)

Crypto Crime: Over $20b lost to rug pulls and scams

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