Crypto Scammers Made Almost $8B From 'Rug Pulls' And Other Scams In 2021

Cryptocurrency scammers made a whopping $7.7 billion from investors across the world in 2021.

What Happened: According to data from blockchain analytics firm Chainalysis, scams were the largest form of crypto-based crime this year.

Scamming activity increased 81% compared to 2020 when the amount of crypto scams dropped due to an absence of large-scale Ponzi schemes.

Chainalysis attributed the emergence of rug pulls as one of the main increases in 2021’s high scam revenue.

Rug pulls refer to a scam that often occurs in the DeFi ecosystem in which the anonymous developers of a cryptocurrency project — typically a new token — abandon it unexpectedly and take users' funds with them.

A recent example of this type of scam would be the Squid Game SQUID/USD crypto token, which gained 83,000% over the span of a few days and then later crashed to zero over the span of a few minutes.

“Rug pulls have emerged as the go-to scam of the DeFi ecosystem, accounting for 37% of all cryptocurrency scam revenue in 2021, versus just 1% in 2020,” commented Chainalysis in the blog post.

“Developers build out what appear to be legitimate cryptocurrency projects — meaning they do more than simply set up wallets to receive cryptocurrency for, say, fraudulent investing opportunities — before taking investors’ money and disappearing,” according to Chainalysis.

Some of the major rug pulls of 2021 included Anubis DAO, which made off with nearly $60 million in investor-raised funds, and Uranium Finance, which stole $50 million from users.

The largest rug pull of the year, however, was not done by an anonymous decentralized protocol. Thodex, a Turkish centralized crypto exchange, halted users' ability to withdraw funds as the CEO disappeared with $2 billion.

Photo: @ethmessages on Unsplash.