65% of Total Crypto Scams in Q3 2023 Were Rug Pull: Hacken

A new report states that rug pull in cryptocurrencies is the most straightforward scam spotted by investors. Hacken’s latest report suggests that the majority of crypto scams usually share distinct and visible features that can be easily spotted.

The blockchain auditor report is based on the trend of crypto hacks, and it includes the evaluation of the affected projects’ security approach. In its report, it mentioned that a significant number of affected projects failed to maintain audits, and others reported audits do not provide any evidence.

The analyzing committee highlighted in the report that 65% of total cryptocurrency scams that occurred in Q3 2023 are of the rug pull category. It is challenging to prevent rug pull attacks despite their high prevalence.

Just 12 of the 78 rug pulls that were inspected underwent a proper audit. Even worse, some of the most significant rug pulls happened after auditors expressed concerns about the token contracts, which their deployers eventually used as a means of defrauding investors out of Millions of dollars.

As per the document, bad actors use token factories that have a similar trend to create scam tokens on a large scale, and this is why many rug pull projects exist in the market because they are easy to carry out.

Dyma Budorin, the co-founder and Chief Executive Officer of Hacken, believes that the majority of the time, investors make decisions in the fear of missing out (FOMO) rather than carefully analyzing the criticality of the threat.

He mentioned Shiba Inu and Pepe’s success story fueled by these types of scams, which help investors to make a considerable profit during the initial stage when users started trusting, its price went down suddenly, and millions of users were stuck behind the success of these projects.

Cryptocurrencies Scams in Q3 2023

The total amount lost in Q3 2023 was $685,510,444, of which $662,850,580 was lost due to hacking in 49 separate instances and $22,659,864 was lost due to fraud in 27 separate occurrences.

During the turbulent quarter, DeFi, in particular, was highly vulnerable to frauds, rug pulls, and cyberattacks. CeFi only had a 27.1% share of the overall losses, with DeFi accounting for 72.9% of them.

A significant portion of the losses in Q3 was attributed to two specific projects, Mixin Network and Multichain, which collectively accounted for $326,000,000, or 47.5% of Q3 losses.

In a notable incident, on September 23rd, 2023, the decentralized Mixin network was breached. It resulted in cybercriminals making off with $200 Million worth of digital tokens.

Multichain experienced its hack on July 7th, 2023, involving the withdrawal of an estimated $126 Million in assets. It affects tokens like DAI, Link, USDC, WBTC, and wETH.

Disclaimer

The views and opinions stated by the author or any people named in this article are for informational ideas only and do not establish financial, investment, or other advice. Investing in or trading crypto or stock comes with a risk of financial loss.