350 new ‘scam tokens’ were created every day this year: Solidus Labs

Greater than 350 fraudulent cryptocurrency tokens had been created per day this yr, defrauding tens of millions of traders, in keeping with blockchain threat monitoring agency Solidus Labs.

From the beginning of the yr to Dec. 1, 117,629 “rip-off tokens” had been deployed in keeping with Solidus’ 2022 “Rug Pull Report.” That’s a 41% enhance from the almost 83,400 rip-off tokens Solidus detected in 2021.

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It marks the biggest yr on file for fraudulent tokens because the agency started monitoring in Sep. 2020.

The report cited the BNB Chain as harboring the best variety of rip-off tokens, claiming 12% of all BEP-20 tokens are scams.

The Ethereum community was second with a purported 8% of ERC-20 tokens alleged to be fraudulent.

A rug pull is a kind of crypto exit rip-off the place a person or crew creates a token and pumps up its value earlier than extracting all the worth from the challenge, abandoning it because the token value plummets to zero.

Nearly 2 million traders have misplaced cash to those scams since Sep. 2020, a higher quantity than the estimated 1.8 million mixed collectors affected by the bankruptcies of crypto exchanges and lending platforms FTX, Celsius, and Voyager.

The preferred kind of rip-off token was a “honeypot”, which is a token good contract that doesn’t enable consumers to resell.

Solidus mentioned probably the most prolific “honeypot” efficiently executed in 2022 was the $3.3 million Squid Recreation (SQUID) token rip-off which grew 45,000% in a couple of days as traders purchased the hype however had been unable to promote, ending with the nameless founders apparently operating off with investor funds.

Centralized exchanges (CEXs) are additionally affected by rug pulls as many behind these malicious tokens use them to fund their fraudulent challenge and money out the ill-gotten features.

Solidus claims round $11 billion price of Ether (ETH) pilfered from rip-off tokens flowed by way of 153 CEXs since Sep. 2020 with nearly all of the exchanges being overseen by United States regulators.

Associated: 5 key takeaways from Huobi 2022 crypto business report

Almost $4 billion {dollars} flowed to U.S. CEXs within the analyzed timeframe which was almost double that of the second most uncovered CEX jurisdiction: The Bahamas.