‘Rug Pull’ Scams Accounted for 37% of all Scam Revenue this Year
‘Sneh Dokania December 17, 2021
The coming of a still somewhat novel market space, through cryptocurrencies, offers fertile ground for scams and other digital crimes to flourish in as well. With that in mind, “Rug Pulls” are a type of scam that stole $2.8 billion from investors this year.
In its report, Blockchain analytics company Chainalysis found that rug pulls have been a key driver behind the $7.7 billion in cryptocurrency-based crimes in 2021.
Rug pull is a seemingly harmless Twitter buzzword used to refer scams that are slightly different from simple scams like fake giveaways or more sophisticated crypto hacks. This type of scam occurs most frequently in DeFi spaces.
Rug pulls drew quite a bit attention just recently, when a cryptocurrency that’s linked to the mainstream Netflix drama Squid Game soared in value before its developers pulled the plug on it, leaving its investors holding empty bags in its wake.
Chainalysis claims that rug pulls have turned into the “go-to scam in the DeFi ecosystem” this year, entailing 37% of all scam revenue over the year versus just 1% in 2020.
On tuesday’s hearing centered around stablecoins, US Senator Elizabeth Warren called DeFi “one of the shadiest parts of the crypto world” and called out to the regulators “to get serious about clamping down before its too late.”
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