Crypto-Related Scams Stole A Whopping $7.7B This Year, 'Rug-Pulls' Account For More Than A Third

Cryptocurrencies and tokens experienced spectacular growth in 2021. So did scams targeting gullible investors jumping on the bandwagon. Crypto-related crimes boomed 81% this year, robbing victims of a whopping $7.7 billion and more than a third of those scams robbed those looking to cash in on the crypto craze.

Almost 37% of these scams were the so-called 'rug pulls', when developers promote a token and drive up its price before making away with the proceeds. Chainalysis estimated that unscrupulous developers have stolen more than $2.8 billion in this manner this year. Rug pulls contributed only 1% of total scams last year.

In a rug pull, developers market what appears to be a legitimate cryptocurrency. Once the users are enticed to purchase newly issued tokens in the hope of earning future gains, the developers will drain the liquidity pools of the project and get away with users' funds by bringing down the price of the token to nothing.

Recently, rug pulls have become common in the DeFi ecosystem because creating new tokens using the Ethereum network is easy. You don't need a code audit to have them listed on decentralized exchanges.

One example is the Squid Game project inspired by the famous South Korean series. The developers were able to earn $3.4 million through the pump-and-dump scheme.

Yet, this was not the biggest. By far, the most significant rug pull this year was with the Turkish centralized exchange Thodex. According to reports, its CEO disappeared with every asset in Thodex custody when the exchange put all user withdrawals at a halt.

The AnubisDAO scam was worth more than $58 million.

However, deposits to scam addresses went down from less than 10.7 million to 4.1 million this year. This data indicates that the individual scam victims were fewer. The dwindling figures also tell us that the average amount taken from individual victims has increased.

There has been a significant decrease in the average lifespan of these investment scams as investigation and prosecution methods improved.

Phishing emails on Gmail decreased by 99.6% since May 2021, thanks to the collaborating efforts of Gmail, YouTube, Cybercrime Investigation Group, Safe Browsing and Trust & Safety teams. They blocked around 1.6 million messages, displayed approximately 62,000 phishing page warnings on Safe Browsing, and successfully restored around 4,000 accounts.

Because of the increased efforts in detection, attackers have shifted away from Gmail and opted for other email providers like aol.com, post.cz, seznam.cz, and email.cz, who have all referred this activity to the FBI for further investigation.

Undoubtedly, these scams have hampered the mainstream adoption of cryptocurrencies as these uniquely targets new users. These scams can be the greatest threat to cryptocurrency's continuous adoption.