Blockchain News

350 New ‘Scam Tokens’ were Created Every Day this Year: Solidus Labs

According to Solidus, a blockchain risk monitoring firm, nearly 118,000 scam tokens were deployed between the beginning of January and the end of November.

According to blockchain risk monitoring firm Solidus Labs, more than 350 fraudulent cryptocurrency tokens were created per day this year, defrauding millions of investors.

According to Solidus’ 2022 “Rug Pull Report,” 117,629 “scam tokens” were deployed from the start of the year to December 1. This is a 41% increase from the nearly 83,400 scam tokens detected by Solidus in 2021.

According to the report, BNB Chain has the most scam tokens, with 12% of all BEP-20 tokens being fraudulent.

The Ethereum network came in second, with 8% of ERC-20 tokens allegedly being scams.

A rug pull is a type of crypto exit scam in which an individual or group creates a token and raises its price before extracting all of the value from the project and abandoning it as the token price falls to zero.

Since September 2020, nearly 2 million investors have lost money to these scams, which is more than the estimated 1.8 million creditors affected by the bankruptcies of crypto exchanges and lending platforms FTX, Celsius, and Voyager.

A “honeypot,” which is a token smart contract that does not allow buyers to resell, was the most popular type of scam token.

The $3.3 million Squid Game (SQUID) token scam, which grew 45,000% in a few days as investors bought the hype but were unable to sell, ended with the anonymous founders apparently running off with investor funds, according to Solidus.

Rug pulls also affect centralised exchanges (CEXs), as many behind these malicious tokens use them to fund their fraudulent project and cash out the ill-gotten gains.

Solidus claims that around $11 billion in Ether stolen from scam tokens has flowed through 153 CEXs since September 2020, with the majority of the exchanges overseen by US regulators.

During the examined time period, nearly $4 billion dollars flowed to US CEXs, which was nearly double that of the second-most exposed CEX jurisdiction: The Bahamas.

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