According to the Rug Pull Report 2022 published by the blockchain risk monitoring company Solidus Labs, more than 350 bogus cryptocurrency tokens were created per day this year between January 1 and December 1.
These tokens were used to commit financial fraud against millions of investors. This is a rise of 41% compared to the almost 83,400 fraudulent tokens that Solidus discovered in 2021.
A significant number of the con artists behind these tokens utilize exchanges that convert cryptocurrencies to fiat currency in order to both finance their schemes and launder their profits. These con artists made deposits and withdrawals totaling $11 billion worth of ETH to/from 153 different CeFi exchanges over the course of the time period the report studied.
The fraudsters did this while taking advantage of the fact that more than 99% of their malicious tokens have been able to evade detection using traditional approaches to the identification of scams.
A shocking number of people who were victims of the rug pull have been found by Solidus. Since September 2020, about 2 million investors have lost money as a result of these frauds. This is a bigger number than the estimated 1.8 million creditors who have been negatively impacted by the bankruptcy of cryptocurrency exchanges and loan platforms FTX, Celsius, and Voyager combined.
One of the most common types of scam tokens was the “honeypot,” a token with a smart contract that prevents purchasers from reselling. According to Solidus, the $3.3 million Squid Game (SQUID) token fraud that surged 45,000% in a few days as investors bought the hype but were unable to sell and ended with the unknown creators presumably fleeing off with investor cash was the most prolific honeypot successfully accomplished in 2022.
