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

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

    adminBy adminDecember 19, 2022No Comments2 Mins Read
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    More than 350 fraudulent cryptocurrency tokens have been created every day this year, defrauding millions of investors, according to blockchain risk monitoring firm Solidus Labs.

    From the beginning of the year to December 1, 117,629 “fraud tokens” were distributed according to Solidus’ 2022 “Rug Pull Report.” This is a 41% increase from the nearly 83,400 fraudulent tokens that Solidus detected in 2021.

    This is the biggest year on record for token fraud since the company began monitoring it in September 2020.

    The report mentions the BNB Chain as the most from scam tokensdeclared 12% of all BEP-20 tokens as fraud.

    The Ethereum network is second with 8% of suspected ERC-20 tokens being fraudulent.

    Solidus claims 2022 is the biggest year on record for crypto-token fraud. Image: Solidus Labs

    A pull the rug is a type of crypto exit scam where an individual or team creates a token and inflates its value before extracting all the value from the project, leaving it as the value of the token drops to zero.

    Almost 2 million investors have lost money to the scam since September 2020, a number greater than the estimated 1.8 million combined lenders affected bankruptcy of crypto exchanges and credit platforms FTX, Celsius, and Voyager.

    The shutdowns of FTX, Celsius, BlockFi and Voyager are estimated to affect more than 2.3 million users combined. Image: Solidus Labs

    The most popular type of token scam is the “honeypot”, which is a token smart contract that does not allow buyers to resell it.

    Solidus says the most productive “honeypot” it successfully ran in 2022 was the $3.3 million Squid Game (SQUID) token scam that grew 45,000% in a few days as investors buy hype but can not sell, ending with anonymous founders apparently walking off with investor funds.

    Centralized exchanges (CEXs) are also affected by carpet pulling as many of these malicious tokens are used to fund fraudulent projects and make profits.

    Solidus claims around $11 billion worth of Ether (ETH) stolen from the scam tokens flowed through 153 CEX as of September 2020 with the majority of exchanges monitored by United States regulators.

    related: 5 key takeaways from Huobi’s 2022 crypto industry report

    Nearly $4 billion dollars flowed into US CEXs in the time frame of the analysis which is almost double that of the second most exposed CEX jurisdiction: the Bahamas.