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Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

blog.chainalysis.com

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Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#51

Post by mschuster91 »

idiotsecant wrote: post #28
BoppreH wrote: post #24

This is my biggest complaint against cryptocurrencies in general. I'm happy with my bank's fraud protection. How can crypto users protect themselves without recreating traditional banking? Bitcoin was released ~13 years ago, and wallet/transaction security has been one of the most important requirements since then (along with scalability, but let's not go there). If trillion dollar market caps and god-knows-how-many…

I think the way you protect yourself is the same way people protected themselves before credit cards were widely used. By not spending your cash on things that are scams. Somehow people managed to survive before banks offered their rent seeking / fraud protection and I think they'd be OK without them if push came to shove.

> Somehow people managed to survive before banks offered their rent seeking / fraud protection and I think they'd be OK without them if push came to shove.

People routinely fell victim to fraud. Why else would the government have introduced bans for ponzi schemes or regulatory requirements to go public with stocks, if not to reduce the amount of fraud?

Just because an entity uses "crypto" instead of "US dollars" it should not be absolved from the requirements of established players, they were instantiated for damn good reasons.

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#52

Post by meowface »

SQueeeeeL wrote: post #40
pjc50 wrote: post #21

So, the question is, what's the scalability of this like? - is there exponential growth still to go, so that we might expect $70bn lost in 2022? - or is there a finite amount of victims to be scammed, after they've lost all their money the rate of scam will decline? - or is it more likely that there will be some kind of intervention?

There is always a finite amount of victims to be scammed, that is the fallacy of ponzi schemes over genuine investment strategies

Indeed, but I don't think we're anywhere near the limit yet. I don't know about exponential growth, but I would predict at least double or triple the amount lost to scams in 2022.

(Barring some massive SEC/DoJ crackdown, or something. And even then, that'd only put a dent in it and would just scare away some US scammers. Most of the big ones are outside the US's reach.)

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#53

Post by JumpCrisscross »

The “I have no sympathy for the victims” comments are crass. But there is a legitimate question of how much law enforcement these crimes deserve.

Arizona has a stupid motorists law [1]. If a car “becomes stranded after driving around barricades to enter a flooded stretch of roadway,” the driver “may be charged for the cost of their rescue.” A similar concept for crypto may be necessary. Law enforcement will pursue. But if they catch the crooks, the cost of enforcement is deducted from the proceeds and flows straight to the Treasury.

[1] https://en.m.wikipedia.org/wiki/Stupid_motorist_law

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#55

Post by mschuster91 »

phpnode wrote: post #48
idiotsecant wrote: post #28

Earlier quoted context omitted.

I think the way you protect yourself is the same way people protected themselves before credit cards were widely used. By not spending your cash on things that are scams. Somehow people managed to survive before banks offered their rent seeking / fraud protection and I think they'd be OK without them if push came to shove.

"I would simply protect myself by not spending cash on things that are scams"

Even professional investors have a hard time telling scams apart from legit operations. Just look at the Madoff scandal.

And when even the professionals fail to see scams, how is the general public supposed to do so?

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#56

Post by shiftpgdn »

AlexandrB wrote: post #8

In related news, Tether has minted $3B USDT in the last month: https://beincrypto.com/tether-mints-three-billion-usdt-past-...

Hang on, minting and circulating are different things. The USDT circulating supply is currently approximately 76 billion.

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#57

Post by SubiculumCode »

BoppreH wrote: post #24

This is my biggest complaint against cryptocurrencies in general. I'm happy with my bank's fraud protection. How can crypto users protect themselves without recreating traditional banking? Bitcoin was released ~13 years ago, and wallet/transaction security has been one of the most important requirements since then (along with scalability, but let's not go there). If trillion dollar market caps and god-knows-how-many…

Okay, invest in a top 40 crypto. Defi scams usually involve outrageous APR and reward claims from a sketchy Telegram channel actively trying to recruit ignorant or vulnerable individuals. Same as every other scammer, but with the new and improved hype words

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#58

Post by mschuster91 »

headmelted wrote: post #27
psychlops wrote: post #23

Unless something changes dramatically, DeFi will remain a haven for scams. It tries to mimic an actual economy which has loans to businesses to pay returns (etc), but DeFi actually is a giant circular digital economy which doesn't create real world wealth.

> but DeFi actually is a giant circular digital economy which doesn't create real world wealth. Isn't this true of the entire cryptocurrency cult though?

> Isn't this true of the entire cryptocurrency cult though?

In the real world, "crypto holdings" are IOUs with a dynamic value of how much is being owed. This absolutely can create (and especially transfer) real world wealth.

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#59

Post by evergrande »

BoppreH wrote: post #24

This is my biggest complaint against cryptocurrencies in general. I'm happy with my bank's fraud protection. How can crypto users protect themselves without recreating traditional banking? Bitcoin was released ~13 years ago, and wallet/transaction security has been one of the most important requirements since then (along with scalability, but let's not go there). If trillion dollar market caps and god-knows-how-many…

Granted, but every new technology goes through this and the tools and best practices are improving. The code is open source too. I don't know why people, technologists especially, aren't recognizing this.

It's also worth examining the current system. How happy are you with your bank's 0.01% interest rate? Which is actually negative when you factor in inflation that's eroding the value of our dollars faster than ever, and increasingly transferring wealth to the top 1%? How happy are you about bank CEO compensation and bailouts? No one in crypto is asking for a bailout, even when it crashes 80%. And what about the fact that bank's charge poor people the most or flat out deny service? Or the fact that it's all closed source and behind closed doors.

Re: Cryptocurrency scams cost owners $7.7B in 2021, driven by DeFi-based “rug pulls”

#60

Post by BoppreH »

idiotsecant wrote: post #28
BoppreH wrote: post #24

This is my biggest complaint against cryptocurrencies in general. I'm happy with my bank's fraud protection. How can crypto users protect themselves without recreating traditional banking? Bitcoin was released ~13 years ago, and wallet/transaction security has been one of the most important requirements since then (along with scalability, but let's not go there). If trillion dollar market caps and god-knows-how-many…

I think the way you protect yourself is the same way people protected themselves before credit cards were widely used. By not spending your cash on things that are scams. Somehow people managed to survive before banks offered their rent seeking / fraud protection and I think they'd be OK without them if push came to shove.

Nope, because cryptocurrencies also removed all other protections.

- The scams are online, so I cannot knock on the scammer's door with an angry mob and ask for our money back.

- Pseudonymous identities means scammers have strong protections against being sued or prosecuted.

- Digital wallets, as opposed to cash in bank vaults, means that you can lose all your savings in one mistake.

- Complete lack of trusted third parties means there's no one to appeal to, or to raise alarms in suspicious cases.

The old protections were already pretty bad (scams and thievery very much did exist), and cryptocurrencies are lacking even those basic protections.

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