According to the latest study conducted by Chainalysis, users who accidentally spent $ 4.6 billion in crypto, obtained in a fraudulent scheme last year that created more than 1.1 million tokens.
Chainalysis research shows that about 25% of these cryptos reflect the “pump and dump” tendency, and many of them are unsuccessful, with the creators stealing $30 million from their victims.
Based on exchange transactions, less than 41,000 of the more than 1 million tokens in circulation in 2022 are considered to have no significant impact on the cryptocurrency market.
A table showing the analytic breakdown and number of tokens suspected to be fraudulent. Source: Chainalysis
They’re All ‘Ways of Pull’
A “rug pull,” or “pump and dump” scheme, is a type of crypto scam. When enough ordinary people buy cryptocurrency, market manipulators “pull the carpet” and sell tokens, making money from investors.
“Pump and dump schemes have also become common in the crypto world,” analysts from Chainalysis wrote in a report published Thursday. It should come as no surprise to observers of the crypto market, where large surges based on rumors and hype can quickly evaporate.
In 2018, Chainalysis conducted research on cryptocurrency pump and dump schemes and studied 175 malicious events that occurred between January 2018 and July 2019, finding that the scheme generated approximately $825 million in trading activity.
Between January 1, 2021 and March 31, 2022, more than 46,000 people reported cryptocurrency scams. That year, it was claimed that $680 million was lost to scammers. During the first three months of 2022, another $329 million was lost to fraudsters.
Pump & Dump – Easy to Carry?
Chainalysis researchers revealed that the prevalence of carpet pulling is largely due to the ease with which bad actors can introduce new digital assets and create artificial prices and market capitalization “on paper” by containing the initial trade volume and controlling the circulating supply. .
According to researchers, 25%, or more than 10,000, tokens released in 2022 experienced a price loss of 90% or more during the first week of trading. He emphasized that in the world of digital currency, the initiative that proposes it can remain anonymous.
The market has been rocked by many high-profile fraud charges this year, including alleged schemes involving FTX and Celsius, and this latest study on bitcoin fraud does little to inspire confidence in the industry.
Crypto total market cap at $1 trillion on the daily chart | Chart: TradingView.com
Risks Tied to Crypto Assets
In January, the US Federal Reserve, the Federal Deposit Insurance Corp, and the Office of the Comptroller of the Currency issued a joint statement saying that the risks associated with digital assets should not be allowed to spread to the larger financial system.
According to a national poll conducted late last year by the Crypto Council for Innovation in Washington, DC, more than half of voters who hold cryptocurrency want action and protection from fraudsters.
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