Scam Tokens Increase by 41% This Year

Over 350 fraudulent crypto tokens were created per day in 2022, according to blockchain risk monitoring firm Solidus Labs

scam tokens

Scam Tokens Increase by 41% This Year. Image: pexels.com

Solidus’ 2022 “Rug Pull Report” revealed that since the start of the year to Dec. 1, 117,629 “scam tokens” were created. That means every day saw over 350 new fraudulent cryptocurrencies emerge. Compared to 2021, there’s a 41% increase in detected scam cryptos.

The most popular type of scam token was a so-called “honeypot”. That includes a smart contract that doesn’t allow buyers to resell the tokens.

The most prominent recent example of a “honeypot” scam is the $3.3 million Squid Game (SQUID) token. Attracting customers by the name of a popular show, the crypto grew 45,000% in a few days. However, investors were unable to sell SQUID, while anonymous founders apparently ran off with the collected funds.

In addition, the study reported that BNB Chain accommodated the greatest number of scam tokens. Namely, 12% of all BEP-20 tokens created this year were fraudulent. The second place went to Ethereum, with 8% of ERC-20 tokens alleged to be scams.

The blockchain risk monitoring firm estimates that almost 2 million investors have lost money to the crypto rug pull scams since September 2020. This number is greater than about 1.8 million creditors affected by the bankruptcies of crypto exchanges and lending platforms FTX, Celsius, and Voyager.

As for the centralised exchanges (CEXs), scammers behind malicious tokens use them to fund projects and cash out. Solidus claims around $11 billion worth of ETH ill-gotten from scam tokens went through 153 CEXs since September 2020.

The majority of these exchanges are overseen by US regulators, while the second-most exposed CEX jurisdiction is the Bahamas.

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