Scammers have conned more than $7.7 billion worth of digital assets from investors in 2021, partly due to the emergence of a new kind of grift in the crypto world, according to Chainalysis.
The analytics firm notes in a new Crypto Crime Report that “rug pulls” are one of the big reasons why scams have skyrocketed by 81% in value this year compared to 2020.
Rug pulls generally refer to when developers promote a new cryptocurrency project to investors and sell affiliated tokens, then withdraw the funds raised during the token sales and disappear.
“Rug pulls have emerged as the go-to scam of the DeFi (decentralized finance) ecosystem, accounting for 37% of all cryptocurrency scam revenue in 2021, versus just 1% in 2020. All in all, rug pulls took in more than $2.8 billion worth of cryptocurrency from victims in 2021.”
While rug pulls usually involve purported decentralized finance (DeFi) projects, that’s not always the case. Back in April, Turkish centralized exchange Thodex conducted the largest rug pull of the year after it stopped allowing users to withdraw their funds.
Thodex CEO Faruk Fatih Ozer disappeared shortly after halting withdrawals, and the exchange’s users lost more than $2 billion worth of crypto – a haul accounting for nearly 90% of funds stolen in rug pulls this year.
Chainalysis notes that scamming is the biggest form of crypto-based crime, and argues that it represents “one of the biggest threats to cryptocurrency’s continued adoption.”
Read the analytic firm’s full report here.
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