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

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

#191

Post by Mvandenbergh » Thu, Dec 16, 2021, 5:26 PM UTC

lottin wrote: post #130

Mvandenbergh wrote: post #71

Maybe I'm missing something, but there's something that I don't get about DeFi. My understanding of the idea is this: 1) Using distributed code, the operation of which is assured by code on a blockchain based system like Ethereum, lending and investment can happen without the intermediation of banks and capital markets gate keepers. The savings from cutting these layers out can be shared between the supply and demand…

DeFi is not well-suited to do finance, i.e. lending and borrowing, because enforcing financial contracts typically requires the ability to exert coercive power, which DeFi can't do. As a result, DeFi can only implement a small subset of not super-useful financial operations. It cannot replace conventional finance by any stretch of the imagination.

Yeah. It would have to be a business where the assets of the operating business were themselves somehow subject to the blockchain logic but I can't see how that would work.

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

#192

Post by nradov » Thu, Dec 16, 2021, 5:26 PM UTC

javajosh wrote: post #172

nradov wrote: post #157

Earlier quoted context omitted.

No that's not how it works. The same basic rules of contract law apply in federal, state, and local courts with only minor variations.

It is how it works. The rules don't matter; the attorneys know what words to say to give a judge reasons to either admit or reject application of any rule. The coin that remains in a case is likeability and making the judge's life easier . The net result is a system where attorneys are falling over themselves to prove who is more obsequious to all the judges. If you become a problem in one case, you will suffer in yo…

That comment is just deranged. I assume you had a bad experience with legal system at some point but you clearly don't understand how it actually operates, especially at the appeals levels.

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

#193

Post by [deleted] » Thu, Dec 16, 2021, 5:27 PM UTC

criddell wrote: post #150

mdoms wrote: post #118

Earlier quoted context omitted.

> It's an american company, with real people behind it. It's not some scammy thing in the Bahamas. Oh yes I forgot Americans can't be scammers.

That's a pretty uncharitable interpretation.

[deleted]

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

#194

Post by [deleted] » Thu, Dec 16, 2021, 5:27 PM UTC

ajross wrote: post #96

Mvandenbergh wrote: post #76

Earlier quoted context omitted.

The flipside of that is that the effective capital markets we have depend on a level of trust which could easily be eroded. There were weeks this year where I saw advertisements all over London for DeFi products and cryptocurrency trading portals. I don't think the majority of people putting money in there had any idea whatsoever what they were doing.

That's a bit circular though. I mean, to be clear I don't agree with the upthread point that we should deemphasize crypto crimes. But that said... the trust in the DeFi economy is being eroded right now , and for some very rational reasons. It's certainly not the government's job to jump in and prop up financial systems in which it's not involved. Its interest is in protecting its own citizens from criminality, not i…

[deleted]

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

#195

Post by Animats » Thu, Dec 16, 2021, 5:27 PM UTC

Scams that will collapse in 2022:

* Axie Infinity. That's a Ponzi in the collapse phase. Their Smooth Love Potion token is down 90% and in a screaming dive, and their Axie token is down 37% from peak. That one is going to hurt a lot of poor people in the Philippines. Many quit their jobs to play Axie's play-to-earn game. All the money comes from later entrants, so it's a Ponzi by definition.

* OpenSea. The NFT market is in worse shape than it looks. People are minting crap art like crazy, and people are buying it at inflated prices, hoping to flip it to a greater fool. If you look at actual resales on OpenSea, they're not happening much. The supply of greater fools is running out. As I've pointed out before, this works just like Beanie Babies on eBay. Asking prices around US$5000, actual sales around $50, most items show zero bids. NFT markets don't visibly crash, they just quietly stall. Most NFT markets don't show statistics which expose that.

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

#196

Post by javajosh » Thu, Dec 16, 2021, 5:27 PM UTC

jeremyjh wrote: post #174

javajosh wrote: post #142

Earlier quoted context omitted.

Nothing annoys me more than arrogant ignorance. It's like, pick one! You speak as if these are handled as federal matters, and they are not. Contract disputes are handed as local matters, usually in a local district court. Furthermore, when you talk about the court you're talking about a Judge. The Judge gets final say and they can take their sweet time, regard or disregard anything they want. In local matters, Judge…

If that were true, it would not be possible to run a sustainable business in any industry. Legal systems need to generate consistent results with respect to contract law in order for commerce to be successful and efficient.

Cite? No, the way it works is that you pay lawyers who know enough to play it out in their heads and determine who has to pay whom to make it go away. If one side is stubborn and ignorant, then they pull the trigger and the years-long, extremely expensive lottery play has begun.

Your assumptions about the law, about judges, and about rationality, rhetoric, and the justice system in general are about to be destroyed. The lawyers know the high variance of court and generally want to avoid court like the plague.

(The justice system is badly broken, obviously. The core issue is that it takes far too long to judge a case, and a big reason for that is a) the rules are too complicated and b) not adopting better tech. We should have trials that start a week after filing, with online juries, online judges, and real-time access to data. The attorneys can finally earn their ridiculous wages by learning how to fly through information and present it in a compelling way.)

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

#197

Post by _fat_santa » Thu, Dec 16, 2021, 5:28 PM UTC

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…

These sorts of rug-pulls blur the line between legal and illegal though. Take the "Save the Kids" token [1]. In this case, they hyped up this token, their audience bought into it thus jacking up the liquidity, and right around the top all the folks that were hyping the token sell off and everyone is left with a token that's basically worthless.

When we talk about law enforcement stepping in, I struggle to see what they could possibly help with in scenarios like this. TBH the FTC or SEC needs to step in and investigate these instances.

[1]: https://www.youtube.com/watch?v=3Xw9rWmTQfc

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

#198

Post by spiderice » Thu, Dec 16, 2021, 5:29 PM UTC

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.

How are people buying in to GameStop after it has gone up by 20 times in price not "the ones that should lost it"? They're obviously just trying to get rich quick, and knowingly taking a risk to do it. Who "should" lose the money in a case like GameStop? I can't think of any scenario where it's not the people jumping in late to try to make a quick buck.

edit: Initially I vastly underestimated how much GameStop stock went up

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

#199

Post by chipotle_coyote » Thu, Dec 16, 2021, 5:29 PM UTC

pjc50 wrote: post #98

ajross wrote: post #96

Earlier quoted context omitted.

That's a bit circular though. I mean, to be clear I don't agree with the upthread point that we should deemphasize crypto crimes. But that said... the trust in the DeFi economy is being eroded right now , and for some very rational reasons. It's certainly not the government's job to jump in and prop up financial systems in which it's not involved. Its interest is in protecting its own citizens from criminality, not i…

> trust in the DeFi economy I thought the whole point was to be trustless?

It is, and I've had a nagging suspicion for a while now that this is the flaw at the heart of cryptocurrency and related phenomena. It's all built on the premise that the answer to "we can't trust existing institutions" is to try and design systems that don't require us to have trust in any actor, but as Sharlin noted, it's difficult to impossible to do anything transactional that doesn't require some level of trust. Perhaps "trust no one" is not actually the right solution to the problem.

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

#200

Post by kristintynski » Thu, Dec 16, 2021, 5:29 PM UTC

Somehow managed to avoid like 5 of these memecoin rugpulls last year. Memecoins are a clown casino, but the memetic dynamics fascinate me.

The right core meme can be a catalyst for compounding user generated content growth. Look for memecoins with community growth metrics that look exponential, make sure the tokenomics are safe, and hold on for dear life.

For me, DogeBonk and perhaps one or two other memecoins have the community growth and memetic qualities to be exponential. So long as there’s no rug.