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Watch For Scams Newsletter. Rug Pull Scams
December 28, 2021
Rug Pull Scams
Watch For Scams is dedicated to helping you avoid becoming a victim of fraud.
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Rug Pull ScamsAccording to the Better Business Bureau (BBB), in 2020, consumers lost about $712 billion to scams and Millennials and Senior Citizens are the most common targets for fraud.
Cryptocurrency is fast becoming involved in the list of scams. This year over $7.7 billion worth of cryptocurrency has been taken from scam victims globally that represents an 81% increase compared to 2020.
This year has been monumental for the cryptocurrency sector in terms of mainstream adoption. A recent report published by Grayscale Investments found that more than one-quarter of United States investors (26%) surveyed own Bitcoin (BTC), up from 23% in 2020. With the holidays around the corner, financial services provider MagnifyMoney also found that nearly two-thirds of surveyed Americans hope to receive cryptocurrency as a gift this year.
So what is a rug pull scam? It is as an instance when a person or developer decides to unexpectedly cease a project and run away with funds. Rug pulls have accelerated the amount of scamming the crypto space has seen this year. In addition to financial scams, rug pulls have exploited different vulnerabilities in the crypto space. Overall, they have taken $2.8 billion of cryptocurrency.
Rug pulls have emerged as the go-to scam accounting for 37% of all cryptocurrency scam revenue in 2021, versus just 1% in 2020.
An example is the AnubisDAO case which was the second-biggest rug pull of this year, with over $58 million worth of cryptocurrency stolen. AnubisDAO launched on October 28, 2021, with claims of offering a decentralized currency backed by a number of assets. However, the project didn’t contain a website or white paper, and all of the developers went by pseudonyms.
Miraculously, AnubisDAO still managed to raise nearly $60 million overnight, yet 20 hours later, all of those funds disappeared from AnubisDAO’s liquidity pool.
Do your ResearchStay away from offers that sound too good to be true.
Start by doing as much due diligence as possible. Look at the company’s/token’s social media profiles to see what other users’ experiences have been. You should also go through the company directors’ personal social media pages and look into their industry connections and employment background so ensure their history is sound.
If you believe you have been a victim of this type of scam you should promptly report it to the IC3's website at www.IC3.gov. The IC3's complaint database links complaints together to refer them to the appropriate law enforcement agency for case consideration.
Remember - always watch for scams!
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