There has also been big growth in DeFi protocols being used to launder dirty money: illicit internet addresses hold at least $US10 billion worth of cryptocurrency, according to previews of the report published on Chainalysis’ blog in the past month.
“DeFi is one of the most exciting, innovative areas of the cryptocurrency ecosystem, and there are clearly big opportunities for early adopters,” the report said. “But the newness of the space and relative inexperience of many investors provides a prime landscape for scamming opportunities by bad actors.”
“New, less-savvy users attracted by cryptocurrency’s growth are more likely to fall for scams than more seasoned users.”
One of the newest techniques used by shysters is the “rug pull”, which refers to investors getting the rug pulled out from under them. This scheme sees developers of a cryptocurrency project – typically a new token – abandon it unexpectedly, taking users’ funds with them. It is easy for those with the right technical skills to create new DeFi tokens and get them listed on exchanges, and many are unaudited.
Rug pulls have emerged as the go-to scam of the DeFi ecosystem, Chainalysis said, accounting for 37 per cent of all cryptocurrency scam revenue in 2021, versus 1 per cent in 2020. Rug pulls took in more than $US2.8 billion worth of cryptocurrency from victims in 2021.
“Scamming will always be a big part of cryptocurrency investment, just like scamming has been part of any financial…
