For years, the cryptocurrency sector has been chastised for harboring scams that have resulted in massive losses for users, with the FTX exchange collapse being the most recent high-profile incident.

In this case, the latest research highlights the extent to which crypto scams affect users, with bad actors adopting new methods to defraud unsuspecting investors. Over the last five years, cryptocurrency-related scams have cost users more than $20 billion, with rug pulls emerging as one of the most notable tricks used by scammers, according to new data from crypto analysis platform Chainalysis.

For example, in 2021, cryptocurrency scams cost approximately $7.7 billion, with rug pulls accounting for $2.8 billion of the losses. 

A rug pull is when a cryptocurrency developer abandons a project or token, drains all funds, and then disappears.

The Most Common Rug Pulling Incidents

One of the most notable examples is the OneCoin case, in which users lost between $4 billion and over $15 billion. It should be noted that the incident does not fully qualify as a rug pull because the currency in question was never publicly listed or decentralized.

Furthermore, in 2021, the Turkish cryptocurrency exchange Thodex scam made headlines, with the platform's founder stealing $2.6 billion in investor funds. Surprisingly, Thodex founder Faruk claimed that the exchange was subjected to a cyber-attack. According to Finbold, he was arrested in Albania after going missing with funds belonging to approximately 400,000 users.

AnubisDAO ($58 million), Uranium Finance ($50 million), DeFi100 ($32 million), Meerkat Finance ($31 million), Snowdog DAO ($30 million), and StableMagenet ($22 million) are among the other projects with significant losses.

In addition, the Squid Game (SQUID) cryptocurrency rug pull hit the market in 2021. The token referencing the popular Korean Netflix series dropped to nearly zero in minutes, just days after posting significant gains.

At the same time, the Ethereum Max (EMAX) token lost nearly all of its value, with regulators taking action against some of the asset's promoters, including socialite Kim Kardashian.

Other rug pulls have resulted in losses ranging from $22 to $58 million, with devastating consequences for small users.

Do you think there is anything that can be done to prevent these scams from happening? Drop your comments by sharing this article on social media.

Nov 17, 2022
Digital Lifestyle

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