It’s no secret that the cryptoverse has become a hotbed for scams, but just how many money-grabbing schemes are actually out there? The answer: probably more than you think.
New data hailing from crypto risk-surveillance startup Solidus Labs reveals nearly 200,000 crypto rug pulls and smart contract scams across twelve blockchains with fifteen new scams detected every hour.
Particularly eye-opening is the number of scams found on popular blockchains BNB Chain and Ethereum. Solidus Labs found that 12% of BNB’s BEP-20 tokens were fraudulent, as were 8% of Ethereum’s ERC-20 tokens.
Crypto scams come in a variety of forms including smart contract scams; where cryptocurrencies have been programmed to steal investor funds, rug pulls; where developers cut and run with investor capital, phishing attacks; where fraudulent dApps or links are used to gain access to data or funds, and token impersonations; where scammers use popular token names or logos to hide their real identity.
These findings shine a harsh light on the sheer scale and depth of fraud plaguing the nascent crypto industry, and, for the most part, it’s going largely unnoticed.
Unless money is being laundered or stolen on a large scale, crypto scams rarely make media headlines, giving the illusion that they’re few and far between, making it easier for hackers to prey on unsuspecting victims.
Evidence suggests that even these small-scale scams have been adding up as hackers have been able to launder an estimated $910 million worth of funds through crypto exchanges over the last two years, according to Solidus Labs.
An uptick in consumer complaints supplements those findings. The U.S. Consumer Financial Protection Bureau recently reported it received more than 2,700 crypto-related complaints since 2020 as the number of retail investors buying and trading digital assets has spiked.
This damage to small investors is a driving force behind U.S. regulators’ crusade to crack down on an industry that’s gained a reputation for being highly volatile and dangerously risky. In fact, this year has seen a significant drop in the comfort levels of U.S. investors thinking about investing in crypto. According to a September Bankrate survey, only 21% of Americans feel comfortable investing in crypto, down from 35% in 2021.
Sinking crypto prices coupled with headlines detailing the evaporation of life savings from the Terra Luna crash, and a myriad of high profile NFT scams have contributed to that fall in confidence, but, as Solidus Labs has pointed out, it’s not just the headline-grabbers investors should be worried about.