In 2021, the cryptocurrency sector will develop very strongly and will be widely used in the mainstream market. one report published by Grayscale Investments shows that more than a quarter of US investors surveyed (26%) own Bitcoin (BTC), up from 23% in 2020. So does financial services firm MagnifyMoney noticed, that that nearly two-thirds of Americans polled hope to receive cryptocurrency as a gift this year.
Despite the strong bull market, the number of scams related to digital assets is also increasing. posts The company’s Chainalysis blog, titled “Crypto Crime Report 2022,” revealed that fraud is a common form of crime in the crypto market. The article notes that over $7.7 billion worth of cryptocurrencies have been stolen from victims worldwide, an 81% increase from 2020. Amount of Cryptocurrency Stolen by Scammers, 2017-2021 | Source: chain analysis Fraud is the biggest threat
Kim Grauer, head of research at Chainalysis, said that while there are many different types of cryptocurrency-related crimes, fraud is the one that has “stolen” the most money from the market. She added that fraud is a major threat to building trust in the crypto ecosystem as it can discourage people from investing in digital assets.
Grauer went on to mention that DeFi-related scams are on the rise this year. With annual stolen funds across all DeFi protocols estimated at $5 billion. More interestingly, however, Chainalsyis has found that rug pull has helped boost sales for scammers this year. According to Grauer, Chainalysis defines a rug pull as a case where a developer suddenly abandons a project and runs away with the investors’ money.
“Rug pull has accelerated the number of scams the crypto space has seen this year. In addition to financial fraud, many rug pulls have exploited various vulnerabilities in the crypto space. In total, they took away $2.8 billion in crypto.”
Although rug pull is a relatively new type of crime, Grauer believes these cases will become commonplace in the burgeoning DeFi ecosystem. To make this clear, the Chainalysis blog post states:
“Rug pull has emerged as the fraud form of the DeFi ecosystem, accounting for 37% of total crypto fraud revenue in 2021, compared to just 1% in 2020.”
The Chainalysis blog post also includes examples of some of the biggest rug pulls of 2021. AnubisDAO, for example, was the second-biggest rug pull this year with over $58 million in stolen cryptos. According to the post, AnubisDAO launched on October 28, 2021 with the claim of offering a decentralized currency backed by multiple assets. However, the project has no website or white paper and all developers are anonymous. However, AnubisDAO still raised nearly $60 million overnight. However, 20 hours later, all collected funds disappeared from AnubisDAO’s liquidity pool.
As AnubisDAO demonstrates the possibility of a large-scale carpet move in the DeFi space, new cases are emerging almost daily. An Ethereum and DeFi investor once said that they fell victim to a rug pull on December 19, 2021. Anonymous sources shared that the project is called “up1.network” and noted that many early Ethereum investors were discussing Up1 on the Discord chat group.
“People I trusted mentioned the project, so I checked it out. I find it strange to see Up1 giving away the airdrop, but I think it might be linked to the DeFi token I have. Then I connected my MetaMask wallet and clicked “Get Airdrop” but got an error message. I did this three times which gave the project access to my account.”
Unfortunately, when Up1 gained access to his account, three $50,000 worth of DeFi tokens were immediately taken away. This investor revoked access after the Etherscan event to prevent more tokens from being stolen. Ethereum investors then checked DeFi platform Zerion, where they saw an indication that DeFi tokens had left their wallets. Zerion also gives them a wallet address where the funds were moved to, along with a message:
“0xc28a580acc42294787f44cffbaa788eaa4958056; You have granted Site3/Smart Contract unlimited access to your funds (check who you have granted access to and withdraw from here)”.
AnubisDAO and Up1 are both good examples of DeFi rug pull. The NFT market is no exception. Most recently, the Bored Ape Yacht Club community fell victim to a rug pull when some members decided to connect their wallets to a link on the group’s Discord channel to mint NFTs.
Even more surprisingly, rug-pull games are also targeting mainstream NFT projects. On October 28, 2021, the global beauty pageant – Miss Universe (Miss Universe) – sent the official tweet notification about their NFT launch on the Wax blockchain. Unfortunately, […]
source How to avoid scam projects and carpet pulling in the crypto market?
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