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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”

#281

Post by jedberg »

I'm glad that people are starting to see the consequences of a decentralized network that is outside the law means there is also no recourse for those who have been wronged.

This has always been my concern about crypto: fiat currency is backed by judges, and if you don't do what the judge says, it is backed up by the violence of an enforcer with a weapon and the ability to put you in a cage.

Crypto doesn't have that. If someone steals it from you there is really no recourse, unless we "recentralize" the network to give certain entities more power than others like we have with fiat currency.

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

#282

Post by spinny »

wizzwizz4 wrote: post #278
amitkgupta84 wrote: post #258

> 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 whic…

> It could be a meaningful technological shift if a lot of the financial infrastructure goes decentralized It's important to note that “DeFi” is more centralised than our existing financial infrastructure. (Also, our existing infrastructure mostly uses open, public, well-known standards with many implementations; most DeFi stuff… documents how it currently works, I guess? Though it's hard to find that documentation.)

have you tried google?

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

#283

Post by vmception »

kristintynski wrote: post #225
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…

Dogebonk is a good example of a community taking over a token, renouncing contract, locking liq etc. fascinating to see a true community meme engine revving up.

Great, yeah, a lot of people aren't inspired enough to consider doing that, and others don't know it happens. The more examples the better. People really aren't as helpless in the crypto space as they act, or prompt onlookers to think.

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

#284

Post by pjc50 »

TimJRobinson wrote: post #246
chipotle_coyote wrote: post #199

Earlier quoted context omitted.

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.…

It's the same as open source software, most people don't personally look at the source code of the Linux Kernel, but they trust it more than Windows because they know many thousands of others have looked at it and haven't found issues. Open systems lead to less trust required, because anyone can verify and report issues. Open finance leads to less trust required because anyone can verify and report issues with the sm…

> anyone can verify and report issues with the smart contracts.

.. anyone who finds an issue in a smart contract can just steal it. Potentially all of it. Pseudonymously.

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

#285

Post by danbolt »

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).

Watching the gameplay trailer, I was flabbergasted when they were straight-up said "you can rent out your ingame items to make money!" meanwhile barely expressing the hook for the gameplay. People talk about power fantasies in games, but I never thought that would extend to being a landlord.

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

#286

Post by spinny »

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…

If you loose you crypto in a dex hack you have my sympathy, if you got rugged with a "double your crypto" kind of scheme or some mooncoin, there is no sympathy for you. The same applies for fiat. This does not make you a victim, it make you a greedy target.

a large majority of those people fall into the greedy category not the victim

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

#287

Post by dsco »

gitfan86 wrote: post #133
TacticalCoder wrote: post #89

Earlier quoted context omitted.

Yes, and although likely a scam, here's another datapoint: Coinbase, an Y combinator unicorn, is behind Centre/Circle and the USDC stable coin. And there are now $41.5 bn USDC circulating. At one point it was billion of USDT circulating and USDC didn't exist yet. Then USDC began to took off and there were, out of memory, $5 bn USDC and $23 bn USDT. But, overall, the trajectory is clear: USDC is growing faster than US…

Issuing stablecoins isn't a scam by itself. The whole crypto ecosystem cashflow is the real scam. There is no liquidity. All it takes is a few people that panic and the whole thing falls apart, UNLESS there is someone ready to print money and prop up the market when panic sets in. That is why people need to understand what is going on with Tether. Bernie Madoff got shutdown because a whistle blower got the SEC to loo…

China has banned Bitcoin several times, there’s been hacks, there’s been central banks going after crypto - yet it’s still here. Why do you believe the whole thing might fall apart?

What you’re missing is that whenever there’s panic selling there’s always someone on the other side finding a great discount.

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

#288

Post by tjungblut »

erichocean wrote: post #218
tjungblut wrote: post #161

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 cr…

How much liquidity did it take to pull off this scam?

In my case they had 100ETH, so quite a lot.

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

#289

Post by NationalPark »

spinny wrote: post #282
wizzwizz4 wrote: post #278

Earlier quoted context omitted.

> It could be a meaningful technological shift if a lot of the financial infrastructure goes decentralized It's important to note that “DeFi” is more centralised than our existing financial infrastructure. (Also, our existing infrastructure mostly uses open, public, well-known standards with many implementations; most DeFi stuff… documents how it currently works, I guess? Though it's hard to find that documentation.)

have you tried google?

Seems super unlikely that somebody with a HN account is unfamiliar with search engines, doesn't it?

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

#290

Post by dvt »

Jerrrry wrote: post #226
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…

"have fun staying poor," he said, clicking on the coin roulette, eyes never leaving his plugged in android tablet, physically hot to the touch from the max CPU load. "i am going to retire in 5 years. have you heard of prove-your-steaks? its gonna change crypto. you can get 20% back, just lock up your starving kids Earned Income Tax Credit for a year, and you'll make $500!" "have you heard of this new shitcoin? probab…

"Hey I just invested $2000 in options a few days ago, what's a margin call?"

"Turns out my pension fund was investing in BBB- CDOs, now they've gone BBBust"

The argument that you can't (or don't) get burned in non-crypto markets is made in bad faith.

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