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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”

#311

Post by spinny »

wizzwizz4 wrote: post #305
spinny wrote: post #282

Earlier quoted context omitted.

have you tried google?

If you know where the documentation for the most popular DeFi system, Bitcoin, is, then by all means share it. • What does the peer-to-peer network protocol look like? • How do I make a transaction / mine a block? I know how to do this using end-user wallet applications, but the open protocols are so very well documented that I'm sure you can find this information easily. The pages that show up in search results[0][1…

"How do I make a transaction / mine a block?" that's a "how does it works ?" kind of question, you need to know how all the small parts work to explain the functionality.

Yes, some aspects you need to look at the code, others you will find documented

i would recommend https://learnmeabitcoin.com/ which has very in-depth resources but it seems to be down at the moment

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

#312

Post by selestify »

zepto wrote: post #277
selestify wrote: post #178

Earlier quoted context omitted.

In general, one shouldn't "invest" in things one doesn't understand very well.

A fairly meaningless statement in reality, since it’s not how most people behave.

Well, what is there to do about it? A fool and their money are soon parted. Must we coddle them at the expense of everyone else?

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

#313

Post by drsnow »

theogravity wrote: post #307
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…

A lot of DeFi scams claim that an auditing company has audited their code. There's also scam auditing companies too that work with these DeFi scams to add to the false legitimacy.

Can you provide a source or two for these claims?

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

#314

Post by tata71 »

Mvandenbergh wrote: post #76
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…

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.

Darwin called for you.

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

#315

Post by BlueTemplar »

TimJRobinson wrote: post #248
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…

DeFi is 2 years old at most. Still very early days and lots of newbies that get exploited.

Wait, Ethereum tokens don't count as DeFi ? Those are older than that...

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

#316

Post by tata71 »

astoor wrote: post #203
pjc50 wrote: post #98

Earlier quoted context omitted.

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

> I thought the whole point was to be trustless? No, it is not trustless, it simply shifts trust from central authorities to more nebulous entities such as anonymous developers, shady mining cartels, unregulated exchanges, and even yourself to not lose your private keys. Which you consider to be better is essentially a political decision.

This is a really gloomy look on "distributed".

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

#317

Post by iszomer »

theogravity wrote: post #307
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…

A lot of DeFi scams claim that an auditing company has audited their code. There's also scam auditing companies too that work with these DeFi scams to add to the false legitimacy.

I've seen projects go as far to claim to have their code audited by simply hosting it on a public github repo.

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

#318

Post by tata71 »

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…

> haven't found issues

No, they have.

https://www.cvedetails.com/vulnerability-list.php?vendor_id=...

That's just less important than running free software to some people. For better or worse.

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

#320

Post by superfad »

pcthrowaway wrote: post #279
arcticbull wrote: post #255

Earlier quoted context omitted.

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/

The article's figures include the centralized Turkish exchange which made off with ~2.6B , so I don't think it's fair to consider it the same kind of thing.

Yeah I agree.

> Rug pulls have emerged as the go-to scam of the DeFi ecosystem, accounting for 37% of all cryptocurrency scam revenue in 2021

So 37% of $7.7 billion is $2.849 billion.

> All in all, rug pulls took in more than $2.8 billion worth of cryptocurrency from victims in 2021.

> It’s important to remember that not all rug pulls start as DeFi projects. In fact, the biggest rug pull of the year centered on Thodex... In all, users lost over $2 billion worth of cryptocurrency, which represents nearly 90% of all value stolen in rug pulls. However, all the other rug pulls in 2021 began as DeFi projects.

The graph shows $2.6 billion was lost with Thodex. So that leaves $0.249 billion that was lost in projects that were rug pulls that began as DeFi projects.

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