Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

blog.chainalysis.com

Post reply on HN
Print view View original

251–260 of 364 posts

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

#251

Post by lern_too_spel »

kyruzic wrote: post #70
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…

Use a trusted exchange if you are worried about that. Holding crypto in a wallet is the equivalent of keeping cash in your wallet. No bank in the world will care if someone steals your wallet.

What "trusted exchange" will make you whole if their wallet gets emptied? There is nothing like FDIC or SIPC covering your assets.

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

#252

Post by tbabb »

JohnJamesRambo wrote: post #201
Animats wrote: post #195

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…

How could Smooth Love Potion have failed us? Which brings up my other point, that people know the risks they are taking. Casinos are still legal. Someone that yolos their life savings into Smooth Love Potion was going to lose it some other way. If you don’t know your 100% apy isn’t sustainable in a DeFi ponzi, that’s on you.

Victim-blaming comments like this make me see red.

"The fact that I am able to exploit these people means that I am entitled to" is everything wrong with Silicon Valley.

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

#253

Post by arcticbull »

chrisweekly wrote: post #222
arcticbull wrote: post #207

Earlier quoted context omitted.

It’s easy not to have sympathy because these folks are the ones railing against the banks and the government and the establishment and police - confident they don’t need them because they’re all in on a system the vast majority doesn’t understand the first thing about. But they’ll demean and criticize anyone who suggests their magic free money machine might not be all it’s cracked up to be. They’ve been warned so man…

I like your take on it. But 7% inflation? Got a source you could cite?

I do believe the medium-term inflation goal of 2% will be reached, and that this is simply a function of supply chain disruptions. I was using the most recent CPI data. You can also get a 7% yield on treasury Series I bonds. [1]

[1] https://www.treasurydirect.gov/indiv/products/prod_ibonds_gl...

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

#254

Post by SubiculumCode »

BoppreH wrote: post #152
SubiculumCode wrote: post #57

Earlier quoted context omitted.

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

I don't want to speculate in cryptocurrencies, I want to use them for their intended purpose, financial transactions. The problem is that I can't do that at anywhere near the safety of my traditional banking institution.

Of course, a lot of cryptocurrencies aren't really meant to be used as currencies. So here is that. Also there are companies that offer insurance on your crypto.

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

#255

Post by arcticbull »

babyshake wrote: post #223
arcticbull wrote: post #207

Earlier quoted context omitted.

It’s easy not to have sympathy because these folks are the ones railing against the banks and the government and the establishment and police - confident they don’t need them because they’re all in on a system the vast majority doesn’t understand the first thing about. But they’ll demean and criticize anyone who suggests their magic free money machine might not be all it’s cracked up to be. They’ve been warned so man…

Is that really a fact, that 10% of the value locked into DeFi was stolen this year? I would think that most of the TVL would accrue to the more blue chip protocols (Aave, Uniswap, Compound, etc.) and to my knowledge these haven't been affected much by these big hacks.

DeFi Pulse says there's just under $100B in TVL. [1] About $10B was lost and stolen this past year depending on where you look - $7.7B according to this article, but I saw $10B circulating too.

[1] https://defipulse.com/

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

#256

Post by jazzyjackson »

dvt wrote: post #235
Animats wrote: post #195

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…

> All the money comes from later entrants, so it's a Ponzi by definition. Axie is not a Ponzi scheme, but is definitely a pyramid scheme (via their scholarships).

Pyramid is money flows up a hierarchy, Ponzi is money flows from new participants to old participants, in practice there is barely a distinction.

The price of the Axie coin is only supported by new buyers (by definition) and coins being sold are nothing more than early adopters cashing out. Any crypto "going to the moon" has this dynamic, coins being sold at 10,000% ROI is ponzi, early adopter paid by a late adopter, the person who bought at the top has already lost their money.

I guess Axie may be both, since there is also a multi-level dynamic.

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

#257

Post by crucialfelix »

Jerrrry wrote: post #126
opportune wrote: post #109

Earlier quoted context omitted.

Fair game and valid according to whom? You cannot legally rob a bank just because they left it unlocked and unmanned. It might be possible to take crypto due to a bug in a protocol, and arguably justifiable, but that doesn’t mean it would hold up in court if you were identified as the one using the exploit.

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…

In New York in the 90s I picked up $150 in small bills off the street. Just strewn around in the middle of the day.

It still gives me delight to remember that. I needed the money, but the continuing pleasure in recalling has been worth far more.

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

#258

Post by amitkgupta84 »

> The most important takeaway is to avoid new tokens that haven’t undergone a code audit. Code audits are a process by which a third-party firm analyzes the code of the smart contract behind a new token or other DeFi project, and publicly confirms that the contract’s governance rules are iron clad and contain no mechanisms that would allow for the developers to make off with investors’ funds.

But how do you know which third party auditors to trust?

What DeFi projects are laying bare is that it’s an absolute marvel that we have functional societies at the scale we do today (USA, EU). Most people can live their lives intuitively knowing which instructions to trust (financial, groceries, restaurants, medical, you name it). All of it is ultimately backed by laws, systems, real people who can be held accountable, and government monopoly of force. Furthermore we rarely have to see that stuff for the system to work and that monopoly on force is rarely abused.

It could be a meaningful technological shift if a lot of the financial infrastructure goes decentralized, digitized/programmatic, and open source. But I’m dubious the mainstream person’s day to day experience will change much, the stability and peace of mind afforded by the structures of our current society are pretty amazing and I don’t see them being replicated in a purely digital and decentralized form.

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

#259

Post by Sohcahtoa82 »

BoppreH wrote: post #73
Sohcahtoa82 wrote: post #64

Earlier quoted context omitted.

Normal individual transactions are secure. I can send money to Bob without worry that someone is going to somehow use the data in that transaction to steal my entire wallet. The "rug pulls" you see are from contracts written maliciously. DeFi is a ponzi scheme written into a Smart Contract, but some of them have an extra function that allows the creator to instantly steal all the money out of it.

> Normal individual transactions are secure. For a very narrow definition. You still need a way to get Bob's wallet address, and to secure your own wallet. Just look around and you'll see plenty of experts failing to do that correctly. > The "rug pulls" you see are from contracts written maliciously. And the contracts, being from DeFi land, are immune from chargebacks or legal prosecution. Regular old fraud, made exp…

> For a very narrow definition. You still need a way to get Bob's wallet address, and to secure your own wallet. Just look around and you'll see plenty of experts failing to do that correctly.

Fair enough. A transaction is secure, but the wallets might not be. If you rely on a 3rd party to host your wallet (ie, Coinbase), then you risk your money being stolen when they get hacked. If you host it yourself, then you risk losing the keys unless you make a backup, and the backup could get lost, or if you store it in cloud storage, it could get stolen there.

Credit cards are harder to secure than wallets IMO, but at least with CCs, you have recourse in the case of fraud.

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

#260

Post by vmception »

nightski wrote: post #101
fastball wrote: post #63

Earlier quoted context omitted.

Right, they minted $3B, taking the circulating supply from $73B to $76B.

Do you have any evidence of that other than the parent link which looks kind of scammy? Everywhere else I have read that the minted $3B is not circulating yet, it's waiting for new purchasers of Tether. Not saying you are wrong by any means, I'm genuinely curious.

Tether mints the tokens upon deposit of fiat on Bitfinex exchange OR when the Tether peg increases above $1 too far. Users are incentivized to do this as well (deposit dollars onto bitfinex, get new tether for that 1:1, sell new tethers above the peg on the open market, pushing the peg down)

Circle/Coinbase use the exact same mechanism.

These kinds of stablecoins are destroyed only upon explicit redemption. Not when sold to someone else on the open market.

It’s not that different from a brokerage account’s deposits. People don’t actually withdraw that much because they don’t need that much cash. They keep their cash in those ecosystems waiting for other trading opportunities and add more from other sources into the exchange.

I know it’s absurd to assume tether functions as described, 99% of the time for 99% of the value. But the market is showing the same thing with stablecoins that are better governed.

For the decentralized/permissionless/uncensorable minded people, The best bet is for other kinds of stablecoins to grow faster

Post reply on HN