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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”

#161

Post by tjungblut »

Especially the automated scam on ETH is really interesting, I also fell for one the other day.

Somebody creates a new smart contract (token) with a funny brand or meme name, puts liquidity into a DEX like Uniswap and sends the token around to named wallets. Some people hop on the train and swap the token for ETH. The clue and actual scam is that you can't ever sell it. If you decompile the smart contract, only the creator address can ever transfer the token.

The whole play takes 10-14 days, they pull the rug in their liquidity pool and move the money to another wallet to start with a new token. The token I got scammed with ended up making 10 ETH profit, after all transaction costs mind you.

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

#162

Post by Jerrrry »

bagels wrote: post #143
Jerrrry wrote: post #126

Earlier quoted context omitted.

Socially acceptable. Because I am not going to acknowledge or respect a Turkish summons. Although I would expect a Turkish hit squad. >You cannot legally rob a bank just because they left it unlocked and unmanned. Exactly - because it isn't a bank, it is a bunch of cash on the street, if it was unlocked and unmanned. And even if there was a clear Sticky Note with foreboding text, you would be in the clear to pocket a…

I suspect that your belief about found things is at odds with the law.

Theft-by-taking has a wholly different level of legal magnitude gravitas than robbing a bank, tho.

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

#163

Post by _6hmp »

reducesuffering wrote: post #100
_6hmp wrote: post #75

Earlier quoted context omitted.

There are definitely ponzi schemes in defi, but I'm not sure celsius is one just because they pay what seem on face to be impossible rates. Gemini, which is regulated and based out of NYC, offers 8% on GUSD, their USD stablecoin. My understanding is returns on this come from a huge demand for crypto lending from institutions participating in the "basis trade", and a limited supply of USD lending available to them for…

My understanding is that the bond market is highly efficient and there is no free lunch. An interest bearing security yielding 8% is a junk bond in today's territory because risk free rate is 0%, and stable corp bonds like Apples are like 1%. 8% is like the price of Argentinian bonds, meaning there is a relatively high chance of default to incentivize capital there compared to the safe 0-1%. Default meaning, the Gemi…

Yes definitely it could be because of risk. There is also a risk that the GUSD isn't returned (with Gemini it's not actually defi, there is no smart contract mandating its return, there is counterparty risk). I'm not saying it's 8% risk free when the risk free rate is 0%. But the article indicates that there is an actual inefficiency here due to institutional restrictions on cryptocurrencies and an institutional demand for products that approximate them.

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

#165

Post by Animats »

vmception wrote: post #74

I think "rug pulls" is not defined well. One example of a "rug pull" is that the team provided liquidity to the AMM liquidity pool, and then removed it, leaving people with no where to trade the token. Its honestly hard for me to call that a scam, although I understand the community expectation being undermined. First: the SEC exacerbates this reality. Tokens that don't want to be considered a security have to consid…

(OK, who went and made Hacker News text uncopyable?)

I think "rug pulls" is not defined well.

It's a standard type of investment scam, "take the money and run". The SEC even has a video for the clueless.[1] And a web site on ICOs.[2]

This scam long predates cryptocurrency, or the Internet. Newspapers made mass-marketing a scam possible. That started about two centuries ago. Most scam types, like this one, are old. They just keep coming around in shiny new wrapping paper. This isn't innovation.

[1] https://www.youtube.com/watch?v=FSBMSSnZ4Ro

[2] https://www.howeycoins.com/index.html

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

#166

Post by surfingdino »

bachmeier wrote: post #94
rwaksmunski wrote: post #19

I really hate to say it, but I have little sympathy for the victims here. They wanted a moon shot, wild west, libertarian paradise and got ... robbed with no recourse. Many more than once.

That's the easy thing to say, but unfortunately a lot of well-intentioned people are losing money, like they did with GameStop. That's not to say I'm shedding tears for everyone losing money, but the ones that should lose it are typically not the ones it's happening to.

Well-intentioned or just greedy? I'm not saying they deserved to get scammed, but let's be clear about their motives... it was greed.

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

#167

Post by danaris »

vmception wrote: post #139
annexrichmond wrote: post #127

Earlier quoted context omitted.

> lol sure if that helps you sleep at night about the decisions you've made in your life thus far. Why was this necessary to say at all?

because it requires introspection, its intentionally a dig at people that rationalize why someone's windfall is "not actually a windfall" like the people who say "$X is not that much these days" (it is and they want it) "That billionaire doesn't really have that much money" (billionaire then sells 10% of their holdings in 3 days for billions of USD) "What about after taxes?" (pay for an accountant, you'll see its bet…

> its intentionally a dig at people

So you're intentionally being insulting, then. And you see that as necessary?

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

#168

Post by Spooky23 »

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?

The problem is that the advocates think crypto is cash, it’s really more like silver - highly volatile, highly attractive to scammers.

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

#169

Post by CalChris »

JumpCrisscross wrote: post #53

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. B…

This is a form of asset forfeiture which would be absolutely ripe for abuse. It is truly an awful idea.

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

#170

Post by surfingdino »

ceejayoz wrote: post #9
wyager wrote: post #3

I often wonder to what extent scams like this have positive externalities, insofar as the people who get scammed were perhaps unlikely to allocate capital in socially efficient ways.

Are the scammers now in possession of $7.7B likely to "allocate capital in socially efficient ways"?

They now have a public, cryptographically protected record of their activities, available for inspection using automated tools by anyone who's interested, including law enforcement.
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