Rise in Scam Tokens: Report Reveals Over 350 Crypto Scams Created Per Day in 2022

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Editing by Nathaniel Cajuday

  • The 2022 Rug Pull report of Solidus showed that there were 117,629 tokens created that only aimed to scam investors, 41% higher compared to 2021’s 83,400 scam tokens. 
  • These 117,629 scam tokens were created from January 1 to December 1, where an average of 350 scam tokens were created per day. 
  • Scammers seem to find BNB Chain as the best platform to create their scam tokens, with 12% of the BEP-20 tokens being fraudulent. 
  • The most prolific “honeypot,” as Solidus described, is the SQUID token, which took $3.3 million worth of the investors’ money.
  • The report also revealed that scammers have stolen more money from investors compared to the combined money lost through the web3 firms’ bankruptcies and collapse.

In the 2022 Rug Pull report, a recent analysis released by blockchain risk monitoring firm Solidus, it was revealed that more than 350 cryptocurrency tokens aimed at scamming investors were created per day from the start of 2022 to December 1.

According to the firm, it has discovered that a total of 117,629 “scam tokens” were created this year, a 41% increase from the nearly 83,400 scam tokens that were detected in 2021.

IT’S GETTING TALLER AND TALLER! Data shows more scam tokens are being created as the year pass.

Moreover, as per the data, Binance native BEP-20 tokens ranked first as the most forged tokens with 12%, while the Ethereum network was at second with 8% of its native ERC-20 tokens being faked.

It can be remembered that two studies in 2021 claimed that 97.7% of the tokens launched on the decentralized cryptocurrency exchange Uniswap use “locking contracts that tend to become rug pulls or malicious tokens eventually.”

Rug pulls are essentially schemes wherein a developer creates a project, promotes it to investors, and then disappears with most (if not all) of its profit.

Accordingly, the report revealed that a token SQUID released in the name of the popular Netflix series Squid Game was the largest scam this year, as it embezzled investors amounting to $3.3 million. Solidus identified this as a honeypot scam, a smart contract that does not allow buyers to resell.

In addition, the report also compared the amount lost on token scams to the major crypto collapse that happened this year. As per the data, almost 2 million investors have lost money to these scams since September 2020, and apparently, this number is still higher than the estimated 1.8 million combined creditors affected by the crash of crypto exchanges and lending platforms FTX, Celsius, and Voyager.

POWERFUL! Data shows there is still more money that was taken by scammers through scam tokens compared to any other firm’s collapse and bankruptcy.

Last November, the crypto exchange FTX collapsed after it was revealed that the assets of its sister company, Alameda Research, were composed of its tokens, which indicates an imbalance in its books.

Recently, its founder and former CEO, Sam Bankman-Fried, was arrested by Bahamian authorities and is now facing charges.

In June, centralized marketplace platform Celcius decided to suspend all withdrawals from its platform after the crash of Terra and Luna and the continuous downtrend of Bitcoin. Following this decision, the price of their cryptocurrency, Celsius (CEL), dropped by 70%.

Cryptocurrency hedge fund Three Arrows Capital (3AC) also suffered losses due to the Terra crash, as it suffered unprecedented losses because of the recent decline in cryptocurrency market prices.

This article is published on BitPinas: From 83K to 120K: 350 ‘Scam Tokens’ Created Each Day in 2022, 40% Higher than 2021 — Report

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.

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