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Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”
- AlexandrB 5y agoIn related news, Tether has minted $3B USDT in the last month: https://beincrypto.com/tether-mints-three-billion-usdt-past-two-weeks/ https://beincrypto.com/tether-mints-three-billion-usdt-past-...
- shiftpgdn 5y agoHang on, minting and circulating are different things. The USDT circulating supply is currently approximately 76 billion.
- vmception 5y agoLiterally nobody claimed otherwise.
- fastball 5y agoRight, they minted $3B, taking the circulating supply from $73B to $76B.
- nightski 5y agoDo you have any evidence of that other than the parent link which looks kind of scammy? Everywhere else I have read that the minted $3B is not circulating yet, it's waiting for new purchasers of Tether. Not saying you are wrong by any means, I'm genuinely curious.
- jstx1 5y agoWhat does "minted" but not circulating Tether even look like?
- bidirectional 5y agoTether minting coins and holding them until someone comes along and exchanges dollars for them.
- vmception 5y agoTether mints the tokens upon deposit of fiat on Bitfinex exchange OR when the Tether peg increases above $1 too far. Users are incentivized to do this as well (deposit dollars onto bitfinex, get new tether for that 1:1, sell new tethers above the peg on the open market, pushing the peg down) Circle/Coinbase use the exact same mechanism. These kinds of stablecoins are destroyed only upon explicit redemption. Not when sold to someone else on the open market. It’s not that different from a brokerage account’s deposits. People don’t actually withdraw that much because they don’t need that much cash. They keep their cash in those ecosystems waiting for other trading opportunities and add more from other sources into the exchange. I know it’s absurd to assume tether functions as described, 99% of the time for 99% of the value. But the market is showing the same thing with stablecoins that are better governed. For the decentralized/permissionless/uncensorable minded people, The best bet is for other kinds of stablecoins to grow faster
- TacticalCoder 5y agoYes, and although likely a scam, here's another datapoint: Coinbase, an Y combinator unicorn, is behind Centre/Circle and the USDC stable coin. And there are now $41.5 bn USDC circulating. At one point it was billion of USDT circulating and USDC didn't exist yet. Then USDC began to took off and there were, out of memory, $5 bn USDC and $23 bn USDT. But, overall, the trajectory is clear: USDC is growing faster than USDT. It's $41.5 bn vs $76 bn today. Maybe in a few months USDC shall catch up, then maybe even surpass USDT. Do we all believe Coinbase and its Centre/USDC stable coin is a scam? It's an american company, with real people behind it. It's not some scammy thing in the Bahamas. Now here's an intriguing question: if we believe Coinbase isn't a scam and that these $41.5 bn USDC are really mostly or all backed, does tether's $76 bn really look that unthinkable?
- deleted 5y ago[deleted]
- yrral 5y agoAnother datapoint: USDC minted 7b in the last 30 days. Does 3b tether in the same time period seem unreasonable?
- ivalm 5y agoThe problem with tether is not the amount minted/in circulation. The problem is that they definitely lied previously about their backing and are probably lying now. If you claim to be one of the worlds largest commercial paper holders yet no one knows whose commercial paper you are holding then that is suspicious. It’s unimaginable that a new large player entered the market and nobody noticed.
- deleted 5y ago[deleted]
- mdoms 5y ago> It's an american company, with real people behind it. It's not some scammy thing in the Bahamas. Oh yes I forgot Americans can't be scammers.
- cdiddy2 5y agoIts also being used as the currency for now ousted Myanmar govt https://www.aljazeera.com/economy/2021/12/14/myanmar-shadow-government-approves-crypto-as-official-currency https://www.aljazeera.com/economy/2021/12/14/myanmar-shadow-...
- foxhop 5y agoThe price of 2 attack subs in 2012
- wyager 5y agoI often wonder to what extent scams like this have positive externalities, insofar as the people who get scammed were perhaps unlikely to allocate capital in socially efficient ways.
- ceejayoz 5y agoAre the scammers now in possession of $7.7B likely to "allocate capital in socially efficient ways"?
- wyager 5y agoPerhaps more likely than the scammed. For example, the scammers may purchase equities.
- Mvandenbergh 5y agoWould be quite funny if the scammers were hard-core Bogleheads dumping everything into ultra-low-fee index funds.
- AlexandrB 5y agoIn an economy where companies prefer to invest in R&D with credit and buy back stock, purchasing equities seems less beneficial than stimulating demand by just buying stuff.
- wyager 5y ago“Stimulating demand” is nonsense - applied Broken Window Fallacy. The net effect of equity investment is to increase the amount of capital targeted towards the production of capital goods; i.e. deferring consumption makes humanity richer in the long term.
- surfingdino 5y agoThey now have a public, cryptographically protected record of their activities, available for inspection using automated tools by anyone who's interested, including law enforcement.
- mnadkvlb 5y agoWell, Melania just launched an NFT. gotta be legit. It even saves the kids, it says so. Happy times /s
- surfingdino 5y agoShe really doesn't care... ;-)
- marban 5y agoPowered by Parler. What can possibly go wrong?
- pjc50 5y agoPeople demanded uncensorability, they can have all the scams they want.
- 1cvmask 5y agoI hadn't heard the term rug pulls before. They used to be called exit scams. A rug pull sounds less scammy I suppose.
- marban 5y agoI found https://moonarch.app/ https://moonarch.app/ > top gainers, to be a good starting point to watch from the sidelines.
- zozin 5y agoThe DotCom Bubble/scam led to investor losses in excess of $5 trillion.
- bananabernhard 5y agoyeah, but the 7.7B is only the scam part - I'd suspect the bubble part of cryptocurrencies and NFTs will be much higher
- pjc50 5y agoI guess that's from https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble ? That's reported as a drop from the peak. But it doesn't necessarily reflect the real losses, in terms of initial investment. It's a number larger than the total amount of "real" M0 money in 2000, for example! Feels more like "an unrealized gain that never materialized" than "loss". I remember that time, it was just after I graduated. There was a lot of business craziness on a scale that defi is yet to reach, although it's already hit some of my peak markers like "rename a stadium".
- deleted 5y ago[deleted]
- dumbfounder 5y agoSo it seems like you are saying DotComs were a scam? Which is obviously insane. I believe we are seeing something similar in crypto. Yes to bubble, and yes there are scams, but wow it seems like there are a lot of people here that think the entire thing is a scam. There are a lot of insanely smart people working on this that are obviously not doing scams, maybe you should take a deeper look?
- can16358p 5y agoAgreed. Super-smart people made these systems possible. Sad to see many people associate crypto with scams and illegal stuff. Well, I've bought a tshirt with Ether and VPN subscription to access Wikipedia and YouTube, from a country that blocks many common VPNs. Super, illegal. Let them keep saying crypto is scam, people who believe in it will win in the long run anyway.
- isoprophlex 5y agoThe optimal level of fraud in society is not 0, as combating fraud costs money. I'm not sure if the current level of crypto-enabled pump and dump is the optimal level though ;)
- cheeseomlit 5y agoIf you put money into an obvious scam you deserve to lose it. Hopefully they learned something from the experience, but I doubt it
- rwaksmunski 5y agoI really hate to say it, but I have little sympathy for the victims here. They wanted a moon shot, wild west, libertarian paradise and got ... robbed with no recourse. Many more than once.
- jdhn 5y agoCompletely agree. You want the libertarian paradise, then you should accept the risks that come along with it. Personally, I'm fine with having it being the wild west, and I only invest money I can afford to lose.
- oakfr 5y ago> I only invest money I can afford to lose. You mean "speculate" here, not invest. People definitely want (and must be able) to invest money that they cannot afford to lose, at least not all in a split second.
- bachmeier 5y agoThat's the easy thing to say, but unfortunately a lot of well-intentioned people are losing money, like they did with GameStop. That's not to say I'm shedding tears for everyone losing money, but the ones that should lose it are typically not the ones it's happening to.
- surfingdino 5y agoWell-intentioned or just greedy? I'm not saying they deserved to get scammed, but let's be clear about their motives... it was greed.
- spiderice 5y agoHow are people buying in to GameStop after it has gone up by 20 times in price not "the ones that should lost it"? They're obviously just trying to get rich quick, and knowingly taking a risk to do it. Who "should" lose the money in a case like GameStop? I can't think of any scenario where it's not the people jumping in late to try to make a quick buck. edit: Initially I vastly underestimated how much GameStop stock went up
- pjc50 5y agoSo, the question is, what's the scalability of this like? - is there exponential growth still to go, so that we might expect $70bn lost in 2022? - or is there a finite amount of victims to be scammed, after they've lost all their money the rate of scam will decline? - or is it more likely that there will be some kind of intervention?
- MBCook 5y agoIt’s not a problem. Once we switch to using sidechains for most of the book keeping we expect to be able to handle 1000x more scams without affecting the main scam. We’re also looking at theft-of-stake instead of theft-of-work to reduce energy usage, allowing scammers to be much more efficient and green. To the moon!
- SQueeeeeL 5y agoThere is always a finite amount of victims to be scammed, that is the fallacy of ponzi schemes over genuine investment strategies
- captn3m0 5y agoCrypto went global while facing zero regulations - that is what let it become the longest running ponzi (?)
- meowface 5y agoIndeed, but I don't think we're anywhere near the limit yet. I don't know about exponential growth, but I would predict at least double or triple the amount lost to scams in 2022. (Barring some massive SEC/DoJ crackdown, or something. And even then, that'd only put a dent in it and would just scare away some US scammers. Most of the big ones are outside the US's reach.)
- psychlops 5y agoUnless something changes dramatically, DeFi will remain a haven for scams. It tries to mimic an actual economy which has loans to businesses to pay returns (etc), but DeFi actually is a giant circular digital economy which doesn't create real world wealth.
- headmelted 5y ago> but DeFi actually is a giant circular digital economy which doesn't create real world wealth. Isn't this true of the entire cryptocurrency cult though?
- mszcz 5y agoI've used DeFi and haven't been scammed. Fees being what they are now aside, I liked the experience. As not being scammed goes, I just avoided everything that was super new (like a project 3 days old that already has $3b in TVL), avoided things that sounded super scammy (Most recent one coming to mind being SQUID token. I mean, come on), avoided things that had no real reason to be, avoided things that I didn't really understand despite research. My most successful investments are those made in crypto winters, during "see? crypto's over".
- mschuster91 5y ago> Isn't this true of the entire cryptocurrency cult though? In the real world, "crypto holdings" are IOUs with a dynamic value of how much is being owed. This absolutely can create (and especially transfer) real world wealth.
- deleted 5y ago[deleted]
- Spooky23 5y agoThe problem is that the advocates think crypto is cash, it’s really more like silver - highly volatile, highly attractive to scammers.
- BoppreH 5y agoThis is my biggest complaint against cryptocurrencies in general. I'm happy with my bank's fraud protection. How can crypto users protect themselves without recreating traditional banking? Bitcoin was released ~13 years ago, and wallet/transaction security has been one of the most important requirements since then (along with scalability, but let's not go there). If trillion dollar market caps and god-knows-how-many billions of investment couldn't figure out how to protect consumers after 13 years...
- MengerSponge 5y agoWe've seen oppressive regimes shut down cryptocurrencies when threatened by them. The remaining argument in favor of crypto boils down to "the problem with traditional currencies is that people who aren't me have too much of them"
- 88913527 5y agoThere's plenty of situations where traditional banking system does nothing. A social engineering scam led to a 6-figure USD theft, it was a down payment meant to be wired as part of a real estate transaction. The money was already out of the country; they got nothing back. There was a local news article about it.
- BoppreH 5y ago> 6-figure USD theft Traditional banking is not perfect by any means, but if 6-figure frauds are making the news, it means they are uncommon. Meanwhile, cryptocurrencies regularly have scams and hacks in the hundred-million dollar range.
- idiotsecant 5y agoI think the way you protect yourself is the same way people protected themselves before credit cards were widely used. By not spending your cash on things that are scams. Somehow people managed to survive before banks offered their rent seeking / fraud protection and I think they'd be OK without them if push came to shove.
- nradov 5y ago"A fool and his money are lucky enough to get together in the first place.” -Gordon Gekko I have zero sympathy for the victims. Stealing from cryptocurrency weenies is almost a public service, like confiscating booze and car keys from teenagers.
- twox2 5y agoHey, so is stealing from the elderly alzheimer's patients right? They're not going to remember anyway! Dick.
- IMTDb 5y agoThe vast difference is that Alzheimer's patients aren't willingly putting their money in dangerous places with the sole purpose of increasing their purchasing power without contributing to society in a meaningful way.
- seoaeu 5y agoTaking someone's keys isn't a public service if you also steal their car.
- literallyWTF 5y agoYeah but like, it’s going to revolutionize fiat currency via blockchain fundamentals and decentralized, high fidelity, p2p transactions! Also, I accidentally sent money to the wrong address, is there a support number I can call to reverse that?
- askonomm 5y agoI also lost the access to my wallet. Is there an office I can show up at with my identification and get a new one?
- Kiro 5y agoCryptocurrencies would be so boring without the scams and shenanigans. I love the wild west.
- lottin 5y agoMaybe because without the scams and shenanigans all that remains is some imaginary tokens that literally do nothing and serve no purpose other than "hodling" them?
- SixDouble5321 5y agoJust like any currency. Not worth anything in and of itself.
- janmo 5y agoAnd there are many ponzis out there. Celsius Network ($25billion) being the biggest one. Read more: https://rorodi.substack.com/p/the-biggest-crypto-lending-company https://rorodi.substack.com/p/the-biggest-crypto-lending-com...
- _6hmp 5y agoThere are definitely ponzi schemes in defi, but I'm not sure celsius is one just because they pay what seem on face to be impossible rates. Gemini, which is regulated and based out of NYC, offers 8% on GUSD, their USD stablecoin. My understanding is returns on this come from a huge demand for crypto lending from institutions participating in the "basis trade", and a limited supply of USD lending available to them for it due to custodianship and regulator issues with cryptocurrencies. https://www.bloomberg.com/news/articles/2021-03-27/crypto-shadow-banking-explained-and-why-12-yields-are-common https://www.bloomberg.com/news/articles/2021-03-27/crypto-sh...
- reducesuffering 5y agoMy understanding is that the bond market is highly efficient and there is no free lunch. An interest bearing security yielding 8% is a junk bond in today's territory because risk free rate is 0%, and stable corp bonds like Apples are like 1%. 8% is like the price of Argentinian bonds, meaning there is a relatively high chance of default to incentivize capital there compared to the safe 0-1%. Default meaning, the Gemini coin will be worthless when you try to withdraw. You could try to ride 8% junk bonds for 3-24 months too.
- _6hmp 5y agoYes definitely it could be because of risk. There is also a risk that the GUSD isn't returned (with Gemini it's not actually defi, there is no smart contract mandating its return, there is counterparty risk). I'm not saying it's 8% risk free when the risk free rate is 0%. But the article indicates that there is an actual inefficiency here due to institutional restrictions on cryptocurrencies and an institutional demand for products that approximate them.
- timdaub 5y agoMy project's goal is to increase the safety in the DeFi space (actually just a small subspace for now): We're monitoring token pools for "rug pulls" and giving them a "safety" rating: https://rugpullindex.com https://rugpullindex.com I also wrote a blog post about the safety crisis in smart contract development: https://timdaub.github.io/2021/12/08/illuminating-the-dark-forest/ https://timdaub.github.io/2021/12/08/illuminating-the-dark-f...
- JumpCrisscross 5y agoThe “I have no sympathy for the victims” comments are crass. But there is a legitimate question of how much law enforcement these crimes deserve. Arizona has a stupid motorists law [1]. If a car “becomes stranded after driving around barricades to enter a flooded stretch of roadway,” the driver “may be charged for the cost of their rescue.” A similar concept for crypto may be necessary. Law enforcement will pursue. But if they catch the crooks, the cost of enforcement is deducted from the proceeds and flows straight to the Treasury. [1] https://en.m.wikipedia.org/wiki/Stupid_motorist_law https://en.m.wikipedia.org/wiki/Stupid_motorist_law
- CalChris 5y agoThis is a form of asset forfeiture which would be absolutely ripe for abuse. It is truly an awful idea.
- throwaway6734 5y agoAny funds allocated to crypto law enforcement should be allocated to punishing tax cheats first
- bilbo0s 5y agoMake it a business decision. Find out how much money we can get policing crypto. We can even charge a greater percentage of potential funds recovered to extract an amount that would make it worth our while. At any rate, with that data we could determine if the money is better spent policing tax cheats. In short if we're going to get paid well, we should help. If not? Well, sorry crypto bros. Sucks to be you.
- pjc50 5y agoI mean, why not both? There's an entertaining subgenre of police blotter reports where people report their illegal drugs stolen. If people report crypto assets stolen (which they very rarely do), maybe have a look at how they acquired them and whether it was reported to the revenue first.
- deleted 5y ago[deleted]
- Mvandenbergh 5y agoMaybe I'm missing something, but there's something that I don't get about DeFi. My understanding of the idea is this: 1) Using distributed code, the operation of which is assured by code on a blockchain based system like Ethereum, lending and investment can happen without the intermediation of banks and capital markets gate keepers. The savings from cutting these layers out can be shared between the supply and demand side of capital. 2) On a temporary basis only, some element of the rewards of contributing external capital, computational power, or other resources to a particular pool of capital are "extra" on top of the core capital allocation function of the pool. These can be structured in various ways but essentially the idea is to bootstrap money into the pools through a reward system that declines over time. 3) If the core proposition, that there is gain to be had from the disintermediation, is true, then at some point pools reach a sort of "ignition" point where the pool exists for that purpose only and the temporary bonuses are no longer required. This would mean that despite structural similarities, these are not Ponzi schemes since there is an eventual state reached were a real function is being performed. Some people will stop contributing to a pool as the rewards taper, but that won't matter because most of the money is now in there to be lent out for profit. 4) If that core proposition is not true, then they are Ponzi schemes because all the growth is coming from the rewards. My problem with (1) is that these are already relatively low margin activities so how can there be enough disintermediation to go at once you account for the default and scam risk on the side of the borrower? It isn't the case that capital is expensive right now, tech investors are giving it away like its going out of fashion, headline borrowing rates are incredibly low, PE is going crazy buying everything. It's also striking to me that the promoters of these DeFi schemes spend so much time on bringing in new lenders but very little seems to be done on the borrower side. Surely if you're building a sustainable capital allocation business, you need a pool of borrowers? Ideally one in a business where they can provide substantial collateral for their loan, support high returns, but somehow can't access other forms of finance (but not because their business is illegal). That would seem to be a rare commodity so I'm surprised not to see pools fighting over access to these borrowers.
- Joeri 5y agoWhat is missing in that explanation for me is the increase in value from perceived artificial scarcity. Like paint on paper costs almost nothing until it has the right artificially scarce provenance and becomes a work of art, some cryptocurrencies can become valuable to hold and trade in and of themselves thanks to perceived scarcity.
- vmception 5y agoI think "rug pulls" is not defined well. One example of a "rug pull" is that the team provided liquidity to the AMM liquidity pool, and then removed it, leaving people with no where to trade the token. Its honestly hard for me to call that a scam, although I understand the community expectation being undermined. First: the SEC exacerbates this reality. Tokens that don't want to be considered a security have to consider NOT providing an expectation of liquidity. The team has to avoid expectations of providing secondary market liquidity just to stay out of the crosshairs of the SEC. And even in SEC registered land, If you look at the "risk factors" section of public equities, they frequently say "there may be no market for these securities, a secondary market may never form, there is no guarantee that it will always be there", which is true in all markets! Second: with the advent of AMMs, ANYONE can provide assets into the liquidity pool. (even the acronym of AMM don't tell you much about what this is, its just a different model of exchange that is very popular). So even if token traders had been relying on the team under an unspoken symbiosis of the team providing liquidity, the token traders now can do it themselves. This is also very common. The token traders typically follow incentives to actually do it, but they CAN without those incentives. Third: Token traders are the community and can take over any project to try to make their investment more profitable, it just requires more risk. It happens, but the times it doesn't happen the token traders just stop engaging with the project as well. How can this be distinguished from other "rug pulls"? I don't think it is possible.
- PragmaticPulp 5y ago> One example of a "rug pull" is that the team provided liquidity to the AMM liquidity pool, and then removed it, leaving people with no where to trade the token. Its honestly hard for me to call that a scam If the team went through all of these steps with the intention of pumping the value of the coin, hyping others into buying it, and then extracting as much money from them as possible with no intentions of helping the coin succeed long-term, that seems like a scam to me. The victim-blaming mentality runs deep in the cryptocurrency world. It's fascinating how many people in the cryptocurrency space are reluctant to call a spade a spade only because the underlying blockchain or algorithmic rules weren't violated.
- 5y ago
- anm89 5y agoIt's hard to understand what to do about this without making some sort of congressional committee to decide which cryptos are good ones and which aren't (and that will obviously never happen and shouldn't) People have a right to spend their money on things. If the choose to spend their money on nonsense that has no contractual obligation to return their funds to them that seems like a legal transaction when the funds don't get returned. I do feel for some of the people who thought they could have a better life by 10xing or 100xing their networth on scam coins but the reality is they didn't do their research and willingly walked into this.
- CincinnatiMan 5y agoTo a certain extent there's value in stopping individuals from giving away their entire networth though, whether they lose it through insecure crypto or to fraudsters calling about "an amazing investment opportunity". People whose lives are wiped out don't simply cease to exist, they very well can become a burden on other members of society. A lot of decisions we make in the modern day have guardrails set up to protect the individual to a varying extent (which is often a topic of politics), so it may be we eventually get guardrails in the crypto space as well.
- alex_young 5y agoThe $7.7B part is a bit hyperbolic right? A lot of value of crypto is based on a small volume of transactions to cash which give a number to the entire asset. If I create 1B secret numbers, sell one for $1, and someone steals the rest, is anyone really out a billion dollars?
- vmception 5y agolol sure if that helps you sleep at night about the decisions you've made in your life thus far. it's not hyperbolic, there is a lot of liquidity in this multi trillion dollar market. although if you're asking this question, the next point might dilute my prior point to you, but a reality is that many people aren't seeking fiat. They don't want dollars. They want more crypto. For physical goods and services there are also enough closed loops to acquire whatever is desired without touching dollars. For digital goods and services they can already be acquired for crypto. But outside of that, charities accept crypto donations. Private equity firms accept crypto in-kind investments as the third party fund administrators have also updated their technology. Politicians accept crypto. No different than any of these entities accepting stocks or bonds, and considering to liquidate some eventually. Except the crypto is more easily exchanged for goods, services, donations, investment. it shouldn't sound absurd, but if it does, just remember that they can also get as much cash as they want whenever they want.
- annexrichmond 5y ago> lol sure if that helps you sleep at night about the decisions you've made in your life thus far. Why was this necessary to say at all?
- vmception 5y agobecause it requires introspection, its intentionally a dig at people that rationalize why someone's windfall is "not actually a windfall" like the people who say "$X is not that much these days" (it is and they want it) "That billionaire doesn't really have that much money" (billionaire then sells 10% of their holdings in 3 days for billions of USD) "What about after taxes?" (pay for an accountant, you'll see its better than you think) and the reality is that liquidity changes faster than the culture. especially across all markets over the last 2 years. so its time to force that introspection.
- benlivengood 5y agoThis is about 0.1% of fraud/scams overall[0], for comparison. [0] https://www.crowe.com/global/news/fraud-costs-the-global-economy-over-us$5-trillion https://www.crowe.com/global/news/fraud-costs-the-global-eco...
- woodruffw 5y agoIt would be as (if not more) fascinating to see an estimate of the true costs here, corrected for wash trading and market manipulation. My outsider's perspective is that the entire thing seems like a shyster's market: scammers scamming scammers, with yet other scammers deciding how much each scammer has gained or lost with only loose ties to ingoing or outgoing money.
- gladinovax 5y agoI read a post on a crypto forum yesterday: "I dont care about your research. Pump my bags, racial slur" That is the level of thinking of many of these folks, i fear.
- superkuh 5y agoThese are not cryptocurrency scams. They are financial scams. They take place almost %100 off any blockchain. Since ~2015 there has not been a new cryptocurrency of consequence. They're all just complex financial scams with nothing to do with cryptocurrency except the name (which attracts people to fleece). No, these scams and the $7.7B are going into the pockets of the normal group of capitalists.
- tjungblut 5y agoEspecially the automated scam on ETH is really interesting, I also fell for one the other day. Somebody creates a new smart contract (token) with a funny brand or meme name, puts liquidity into a DEX like Uniswap and sends the token around to named wallets. Some people hop on the train and swap the token for ETH. The clue and actual scam is that you can't ever sell it. If you decompile the smart contract, only the creator address can ever transfer the token. The whole play takes 10-14 days, they pull the rug in their liquidity pool and move the money to another wallet to start with a new token. The token I got scammed with ended up making 10 ETH profit, after all transaction costs mind you.
- erichocean 5y agoHow much liquidity did it take to pull off this scam?
- tjungblut 5y agoIn my case they had 100ETH, so quite a lot.
- erichocean 5y agoThanks
- DomainGuard 5y agoWe've been identifying and reporting on a ton of crypto fraud. Any popular site that uses a "wallet connection" is ideal for scamming, and unfortunately, these scams are widely successful. The scam asks users to enter their wallet secrets to connect their wallets. The general crypto community consensus is that if you fall for these scams, you deserve it. There are a lot of newcomers to crypto, and unfortunately, many people are falling for these scams. These phishing sites are combined with other avenues that make the scam more successful. Right now, there's an active google ads phishing campaign targeting the "Biswap" crypto exchange, so if you google "Biswap," there's a good chance you'll see fake Google ads. If the very first thing you see on Google is what you're looking for, and it leads you to a site that looks just like the site you expect to be on - why would you think twice? We've also seen cases where scammers create fake support accounts to impersonate legitimate organizations, such as Opensea, and use Twitter to trick victims onto counterfeit sites. The sites may seem obvious on their own, but when you combine these additional steps scammers take, it's clear to see why the scammers are having so much success. Here's our Twitter feed where we post some of what we find on our day-to-day. https://twitter.com/GuardYourDomain https://twitter.com/GuardYourDomain
- salmonet 5y agoHow much have cryptocurrency non-scams earned owners in 2021?
- Animats 5y agoScams that will collapse in 2022: * Axie Infinity. That's a Ponzi in the collapse phase. Their Smooth Love Potion token is down 90% and in a screaming dive, and their Axie token is down 37% from peak. That one is going to hurt a lot of poor people in the Philippines. Many quit their jobs to play Axie's play-to-earn game. All the money comes from later entrants, so it's a Ponzi by definition. * OpenSea. The NFT market is in worse shape than it looks. People are minting crap art like crazy, and people are buying it at inflated prices, hoping to flip it to a greater fool. If you look at actual resales on OpenSea, they're not happening much. The supply of greater fools is running out. As I've pointed out before, this works just like Beanie Babies on eBay. Asking prices around US$5000, actual sales around $50, most items show zero bids. NFT markets don't visibly crash, they just quietly stall. Most NFT markets don't show statistics which expose that.
- JohnJamesRambo 5y agoHow could Smooth Love Potion have failed us? Which brings up my other point, that people know the risks they are taking. Casinos are still legal. Someone that yolos their life savings into Smooth Love Potion was going to lose it some other way. If you don’t know your 100% apy isn’t sustainable in a DeFi ponzi, that’s on you.
- dvt 5y ago> Casinos are still legal. Casinos are not pyramid schemes, Axie is.
- tbabb 5y agoVictim-blaming comments like this make me see red. "The fact that I am able to exploit these people means that I am entitled to" is everything wrong with Silicon Valley.
- mdoms 5y ago> Casinos are still legal. Depends where you are in the world...
- rchaud 5y ago
- kristintynski 5y agoSomehow managed to avoid like 5 of these memecoin rugpulls last year. Memecoins are a clown casino, but the memetic dynamics fascinate me. The right core meme can be a catalyst for compounding user generated content growth. Look for memecoins with community growth metrics that look exponential, make sure the tokenomics are safe, and hold on for dear life. For me, DogeBonk and perhaps one or two other memecoins have the community growth and memetic qualities to be exponential. So long as there’s no rug.
- duplicited 5y agoCrypto is ridden with rugpulls. It’s extremely hard to find a diamond in the rough and you’re going to lose money doing it. Look for projects that focus on building community rather than pumping and dumping. I’ve been dabbling in DogeBonk and it’s funny how other “bonk” coins keep getting rug pulled around it while DogeBonk keeps on going
- chefandy 5y agoDo you have an example of a particularly well-done rug pull that would help this layman understand the scam better? I totally understand why folks fell for Bernie Madoff's scheme. He had a brick and mortar office, a stellar reputation, and a relatively well-known face. Revealing his scam destroyed his life and he couldn't have easily disappeared into thin air before facing consequences. His clients are no better off, but the consequences alone would keep the vast majority of investment managers from blatant cash grabs. Conversely, the caveat emptor nature of cryptocurrency and the ubiquity of scammers would stop me investing a cent based solely on a website, PR, and/or social media buzz— none of which require anything beyond a small amount of initial capital. Do their techniques go beyond that? Were any anchored to well-known people or organizations?
- tjungblut 5y agoCheckout what squid (from the squid game series on netflix) did very recently.
- deleted 5y ago[deleted]
- chefandy 5y agoEdit— this was in response to an earlier comment that wouldn't stick to the thread for some reason. As a layman, I asked if a rug pull had ever happened in a coin run by someone with real credibility. Someone responded saying I should check out the Squid rug pull. Not sure if they were using that as an example of a currency run by credible people, but it seemed so. Here's my answer. So I looked it up— it was just some anonymous people on the internet having nothing to do with Netflix whatsoever, right? I assumed I was just missing the tricky part... people really serially put cash into unvetted ecosystems which you can only assume will behave the way anonymous developers say it will, indefinitely? It's all run by who would almost certainly be better off themselves if they just took the cash and ran? And they assume that windfall profits are a likely outcome for this behavior? Unless I'm missing something, that's not investing— that's a gambling addiction. And at least the small time bookie who doesn't hide his organized crime ties has a professional reputation at stake if he doesn't pay out.
- pjkundert 5y agoLike that crazy scam where everyone who held the currency had its value reduced by 10% in one year, after the total units in circulation was increased by 100% the year prior? Oh, wait...
- chrisco255 5y agoDeFi market cap one year ago was probably less than $7B. Now it's over $100B. That is value that has been created. Crypto is a worldwide, 24/7, permissionless market. It's likened to the wild west. There have been numerous rug pulls, but if you focused all your energy on snake oil salesmen and gangsters in the West, you'd miss the fact that there was real, sustainable value there. A lot of people left Bitcoin after the Mt. Gox meltdown in 2013. And yet the space continued to evolve and grow. If you're interacting with DeFi, especially if you're new to crypto, stick with the blue chips like Uniswap, Aave, Compound, and Bancor. They are battle tested. Look for projects that pay for audits, bug bounties, and do due diligence with regards to security. Don't chase a copycat fork of a popular project on a third rate chain because you feel you missed out.
- malermeister 5y agoIs it really value that has been created, though? Sure, numbers on computers went up, but is there any value to society in that?
- ForHackernews 5y ago> That is value that has been created. I have 1000 toenail clippings I've carefully collected over the last few years. Each is unique and carries a genetic signature that is very difficult to replicate. My toenails don't grow very quickly, so the supply is limited. This morning, I sold one toenail clipping to my wife for $100,000. My toenail shard pile now has a market cap of $100 million. That is value that has been created.
- Daishiman 5y agoWhat value was grown? The only thing that has been shown to have "value" is playing around with interests and staking to create unsustainable returns on speculation, nothing else, which I guess if you're into financial speculation can count as such. Who's actually using these coins to do anything in the real world?
- hammyhavoc 5y agoNobody.
- deafnun 5y agoHonestly, it's up to the buyer to take the responsibility read through the contracts on these tokens, run them through tools like token sniffer, look at the holder distribution, see if contracts are renounced, see if there were air drops to pre-sales to friends and token creators, do their research and see how the community is interacting, and making sure that all the boxes tick before throwing their own hard earned money at it. If you lose, that's the risk you took for the gains you wanted. Sucks to suck, but you're responsible for homework that you do before buying into a token and you're responsible for the money that you win or lose.
- djohnston 5y agoHow much is lost to fraud globally each year? 8B doesn't sound that large tbh.
- amitkgupta84 5y ago> The most important takeaway is to avoid new tokens that haven’t undergone a code audit. Code audits are a process by which a third-party firm analyzes the code of the smart contract behind a new token or other DeFi project, and publicly confirms that the contract’s governance rules are iron clad and contain no mechanisms that would allow for the developers to make off with investors’ funds. But how do you know which third party auditors to trust? What DeFi projects are laying bare is that it’s an absolute marvel that we have functional societies at the scale we do today (USA, EU). Most people can live their lives intuitively knowing which instructions to trust (financial, groceries, restaurants, medical, you name it). All of it is ultimately backed by laws, systems, real people who can be held accountable, and government monopoly of force. Furthermore we rarely have to see that stuff for the system to work and that monopoly on force is rarely abused. It could be a meaningful technological shift if a lot of the financial infrastructure goes decentralized, digitized/programmatic, and open source. But I’m dubious the mainstream person’s day to day experience will change much, the stability and peace of mind afforded by the structures of our current society are pretty amazing and I don’t see them being replicated in a purely digital and decentralized form.
- lupire 5y agopeople say "oh Bitcoin is mature it's 10 years old". Meanwhile the world is amazed that the United States is so stable at only 200 years old. And these shitcoins are weeks old. and these aren't new products. Each one is, by design, a new governance structure. Would you take a vacation or move your life to a country that was invented last week.... by anonymous people?
- wizzwizz4 5y ago> It could be a meaningful technological shift if a lot of the financial infrastructure goes decentralized It's important to note that “DeFi” is more centralised than our existing financial infrastructure. (Also, our existing infrastructure mostly uses open, public, well-known standards with many implementations; most DeFi stuff… documents how it currently works, I guess? Though it's hard to find that documentation.)
- 5y ago
- Trias11 5y agoEducation is needed to help people understand the risks. No education will stop many from going to Casino and blow through their savings. If they wish to engage into recovery effort - there will be rules of this engagement.
- jedberg 5y agoI'm glad that people are starting to see the consequences of a decentralized network that is outside the law means there is also no recourse for those who have been wronged. This has always been my concern about crypto: fiat currency is backed by judges, and if you don't do what the judge says, it is backed up by the violence of an enforcer with a weapon and the ability to put you in a cage. Crypto doesn't have that. If someone steals it from you there is really no recourse, unless we "recentralize" the network to give certain entities more power than others like we have with fiat currency.
- somewhereoutth 5y agoArguably, all crypto currencies are a scam. The only difference is the timescale - even Bitcoin will 'rug-pull' eventually. The do not have value in any sense - even sending money overseas is cheaper, more convenient, and more secure by traditional methods. Money going out + money spent on mining = money coming in. Crypto evangelists are always keen for punters to put in regular amounts - presumably because then someone can take out regular amounts, and so avoid actually having to work for their living.
- BlueTemplar 5y agoAm I reading this right ? $2M scammed by a rug pull named... "WarOnRugs" ?!