- Crypto scammers raked in a near-record $7.7 billion in revenue in 2021, said Chainalysis.
- The 81% revenue surge was paced by a relatively new type of scam called “rug pulls.”
- A rug pull is when developers unexpectedly abandon their cryptocurrency projects and take users’ funds with them.
Cryptocurrency scammers worldwide pulled in nearly $8 billion in revenue in 2021, led by a relatively new tactic called “rug pulls,” according to Chainalysis.
Revenue from scams jumped by 81% from a year ago to $7.7 billion in cryptocurrency, the blockchain data platform said Thursday in a blog post that will be part of its larger Crypto Crime report coming in 2022.
“As the largest form of cryptocurrency-based crime and one uniquely targeted toward new users, scamming poses one of the biggest threats to cryptocurrency’s continued adoption,” said Chainalysis.
This year’s revenue surge was propelled in part by the emergence of “rug plugs” that leave investors in crypto-projects empty-handed.
They have become the “go-to” scam in the decentralized finance, or DeFi, ecosystem, Chainalysis said. In those schemes, developers of a cryptocurrency project — typically a new token — unexpectedly abandon it and take users’ funds with them.
Rug pulls accounted for 37% of all cryptocurrency scam revenue this year compared with 1% in 2020, and left victims without $2.8 billion worth of their cryptocurrency.
“Rug pulls are prevalent in DeFi because with the right technical know-how, it’s cheap and easy to create new tokens on the Ethereum blockchain or others and get them listed on decentralized exchanges (DEXes) without a code audit,” said Chainalysis.
“While code audits that would catch these vulnerabilities are common in the space, they’re not required in order to list on most DEXes, hence why we see so many rug pulls.”
This year’s largest rug pull, however, didn’t start as a DeFi project, it said. Thodex was a large Turkish centralized exchange whose CEO disappeared shortly after the exchange halted fund withdrawals by users, the report said. Users lost more than $2 billion worth of cryptocurrency or nearly 90% of all value stolen in rug pulls.
The second-largest rug pull of 2021 was AnubisDAO, at more than $58 million worth of cryptocurrency stolen.
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