An estimated $ 2.8 billion in cryptocurrencies have been mined from victims this year
The crimes of fraud related to bitcoin (BTC) and the other cryptocurrencies on the market have marked a considerable increase in 2021, with the Rug Pulls as one of the illegal activities with the most presence and growth.
According to data that came from the blockchain analytics firm, Chainalysis, rug pull is a new type of cryptocurrency scam that usually happens on decentralized finance platforms (DeFi), such as decentralized exchanges (DEX).
The crime gets based on a move that the developers of a cryptocurrency project make. They abandon it or withdraw the liquidity of the asset, taking with them the funds that the users invested.
The firm itself highlights cases in which developers create what appear to be legitimate cryptocurrency projects, which go beyond wallets for investment opportunities before taking money from investors and disappearing from the scene.
According to Chainalysis, rug pulls are one of the most relevant types of scam in the DeFi ecosystem this year, encompassing 37% of all income from illicit activities in 2021 alone, compared to 1% in 2020. That figure represents at least USD 2.8 billion in cryptocurrencies extracted from victims in the current year.
The firm specifies that most of these crimes involve developers creating new tokens and promoting them to increase their value, providing liquidity to the project, as with most DeFi projects.
Not Everything Happens in DeFi Projects
Chainalysis clarifies that not all rug pulls to start out like DeFi projects, recalling that the most relevant scam this year originated from Thodex, a centralized exchange in Turkey. In this case, the CEO completely vanished from the scene after the exchange house prevented users from withdrawing their funds. Users ended up losing more than $ 2 billion in cryptocurrencies, which gets equal to 90% of all the stolen value.
Chainanaysis warn that all rug pulls in 2021 started as DeFi projects. They approached AnubisDAO, which was the second-largest scam case of its type in 2021, where USD 58 million in stolen cryptocurrencies was the balance of the crime. They say it provides an excellent example of how rug pulls work in DeFi.
AnubisDAO got launched in October with the promise of a decentralized currency and gets backed by a basket of assets. After gathering nearly $ 60 million from investors, who received the project’s ANKH token in exchange for financing, all funds, primarily wrapped ether (wETH), disappeared from AnubisDAO’s liquidity pool and moved to many new addresses.
AnubisDAO, according to ChainAnalysis, used contracts created with Balancer’s liquidity start-up protocol to receive and retain the wETH sent to its liquidity pool in exchange for ANKH tokens.
The management that applied the liquidity pool contract was already having the vast majority of the liquidity provider tokens for that pool. Twenty hours after the sale took place, the management cashed in for their massive holdings of tokens. These massive holdings allowed them to seize nearly all of the group’s wETH and ANKH.
By: Jenson Nuñez
