Rug Pulls' Dominate 65% of Q3 Crypto Scams, Says Hacken Report: Urges Investor Vigilance
Summary:
Hacken, a blockchain security auditor, has released a report indicating that Cryptocurrency "rug pulls", a type of exit scam, accounted for over 65% of all crypto scams in Q3 2023. The report also suggests these scams are preventable, with a key recommendation being a close examination of third-party audits. Hacken's co-founder, Dyma Budorin, warned investors against haste and the fear of missing out (FOMO), which often lead to overlooking red flags in projects.
A fresh report reveals that identifying cryptocurrency scams, specifically "rug pulls," isn't too difficult due to their conspicuous characteristics. On October 25th, Hacken, a blockchain security auditing firm, published a report shedding light on the trends in third-quarter cryptocurrency hacks and examining the security measures taken by the affected projects. Hacken's study displayed particular interest in "rug pulls," a class of exit scams where project developers artificially inflate their project's token value before suddenly withdrawing liquidity. As per the study, most scams in the crypto world, making up over 65% of all hacks in Q3 2023, were "rug pulls." The report attributes this prevalence to the ease of setting up such schemes, with serial fraudsters often utilizing token factories that demonstrate identical patterns to manufacture fraudulent tokens on a large scale.
Despite being widespread, Hacken asserts that cryptocurrency "rug pulls" are among the easiest scams to prevent and shares several pointers based on its Q3 observations. An essential precautionary measure is to check if a project has undergone an independent third-party audit. Of the 78 rug pulls examined in Q3 by Hacken, only 12 claimed to have been audited in any capacity. However, having an audit doesn't necessarily safeguard against scams. Users need to closely examine audit reports as a token can be audited and receive a subpar score, which users often disregard, satisfied with the mere fact that an audit has been conducted.
Dyma Budorin, Hacken's co-founder and CEO, contends that investors frequently neglect red flags like the absence of audits and other issues due to factors like the fear of missing lucrative opportunities (FOMO). The industry has witnessed profitable ventures like Pepe (PEPE) and Shiba Inu (SHIB), wherein an initial $100 investment resulted in significant earnings, causing observers to hope for similar outcomes. Budorin notes that this hunger for quick and hefty returns often leads people to disregard red flags and hastily plunge into investments.
Budorin also emphasizes that fraudulent actors take advantage of this factor, skillfully mimicking successful projects and alluding to prosperous projects, thereby intensifying the public's FOMO. According to the Hacken CEO, the ease with which one can invest in cryptocurrency, requiring just a few clicks, might also foster impulsive decision-making.
Published At
10/25/2023 8:19:12 AM
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