Warning: the number of crypto asset fraud cases in 2021 will rise by 81% over last year!
It is unrealistic to expect your enthusiasm for cryptocurrency to increase your chances of making money if you are interested in becoming a cryptocurrency investor and have never been exposed to cryptocurrency investment before. Before you become a cryptocurrency investor, you should have a good attitude and effective methods to deal with various risks, such as how to deal with fluctuations in the cryptocurrency market to prevent online fraud, so that you do not lose your assets. This is a basic quality that every cryptocurrency investor should have.
BigONE recently paid attention to a research report on crypto crimes released by the blockchain data platform Chainalysis, which revealed that criminals all over the world stole $7.7 billion in crypto assets from victims this year, indicating that the number of cases of crypto asset fraud in 2021 has increased by 81% compared to last year. As can be seen, criminals’ fraud against encrypted assets is still prevalent, so investors should raise their level of awareness about preventing online fraud.
Proliferation of new fraud methods
Fortunately, while the total amount of fraud involved has increased by 81% since 2020, it still shows a sharp downward trend when compared to data from 2019, resulting in an increase in the total amount of fraud involved in 2021. The main reason for this is the emergence of a fraudulent method known as “Rug Pull.”
“Rug Pull” fraud is a new type of fraud. Because of its decentralized and unregulated nature, DeFi is particularly vulnerable to this type of attack. As we all know, creating a token for the DeFi platform is simple and does not require any review. Rug pull project developers typically use the Ethereum network for project development because it adheres to the ERC-20 standard and is open source. Tokens are simple to make. When a malicious DeFi project is created, its developers may use a variety of excuses to announce the project’s abandonment and disappear with all investor funds. If investors participate in such projects, they risk losing all of the funds they have pledged in these DeFi projects.
Rug pull scam victims are mostly from decentralized exchanges. A slew of new DeFi project native tokens have appeared on the market. Its creators pair these tokens with popular cryptocurrencies like ETH and USDT and allow users to exchange them in order to attract investors’ attention with higher returns. As the number of investors grows, the developers of these Rug pull projects will flee with the established funds collected in the agreement, such as ETH and USDT.
The fraud cycle is becoming shorter.
Related agencies analyzed cryptocurrency data for three years in a row and discovered that, despite increased investor awareness to prevent fraud, the total amount of assets affected by fraud has decreased. However, with the emergence of more and more new fraud methods, more investors’ funds have been lost, particularly those of novice cryptocurrency investors who lack prevention awareness. The data also shows that the average survival period of various fraud methods is getting shorter and shorter, indicating that the time for criminals to complete the crime is getting shorter. The average number of active fraud days in 2021 was only 70 days, down from 192 days in 2020 and 2,369 days in 2013. This figure has been steadily declining since then. BigONE explored the causes and believes that the increasing efficiency of law enforcement investigation agencies has put pressure on criminals and made them aware of the need to cause problems for law enforcement agencies.
Before you finish, pay attention to the scam.
The key to protecting yourself and your investment is to be vigilant.
BigONE believes that, despite the fact that cryptocurrency companies, financial institutions, cryptocurrency exchanges, and the media all play an active and important role in educating and publicizing how to avoid fraud. However, investors must accept responsibility for their investment decisions. It is critical that they maintain a cautious and rational attitude, or they may lose all of their invested funds.