Cryptocurrency losses resulting from “rug pull” exit scams that see founders disappear with investors’ funds outpaced losses from decentralised finance (DeFi) hacks in May, according to Beosin. The blockchain security firm’s report revealed $45.02m was lost across six rug pull incidents last month, while 10 attacks on DeFi protocols netted $19.7m. Beosin said “hackers and scammers are gradually shifting the target of their attacks from various project parties to ordinary users,” and advised users to raise their anti-fraud awareness and undertake due diligence on projects before investing. It also warned against the use of shared or public charging devices.
A recent report by blockchain security firm Beosin, highlighted that the losses from crypto rug pulls overtook DeFi exploits in May. The report shows that losses from such scams reached a staggering $325 million in May alone. In contrast, losses from DeFi exploitation during the same period were roughly $140 million.
Crypto rug pulls are a form of scam that operates by creating a fake project or token. The scammers will then promote the scheme, sometimes under the guise of a legitimate project. Once investors have deposited funds into the project, the scammers will then pull the rug by removing the funds. This means investors are left with worthless tokens and no way to recover their investments.
Beosin’s report shows that crypto rug pulls have become increasingly sophisticated and difficult to detect. Some scammers have even created fake liquidity pools to lure investors in, making it more difficult to identify that the scheme is a scam.
The report further highlights that DeFi exploits, which were once a major cause of concern, have decreased in frequency. However, when they do occur, they tend to be more severe and have a higher impact on the ecosystem.
The rise in crypto rug pulls can be attributed to the popularity of DeFi and the ease of creating new projects. With a lack of proper regulation and oversight, scammers have been able to exploit the trust of investors and siphon off funds.
To protect themselves from such scams, investors should conduct thorough research into any project or token before investing. They should also be wary of promises of high returns and suspicious offers. Additionally, it is important to only invest what can be afforded to lose and to diversify investments across different projects and cryptocurrencies.
Overall, the rise in rug pulls and scams underscores the need for stronger regulation in the crypto ecosystem. While DeFi has the potential to revolutionize finance, the lack of proper oversight and regulation has made it vulnerable to exploitation by scammers.
Original Source: cointelegraph.com