Crypto's Dark Side: $20 Billion Gone in Rug Pulls & Frauds

Last Updated August 28th 2023
4 Min Read

Key Takeaways -

  • The crypto world has seen losses of over $26 billion due to increasing scams, with "exit scams" doubling in occurrence this year.
  • Different crypto platforms face unique challenges, with BNB Chain, Ethereum, and Polygon experiencing significant security breaches and losses.
  • Despite the chaos, Bitcoin remains resilient and secure, attributed to its decentralized nature and robust blockchain features.

The world of cryptocurrencies and digital assets is a mesmerizing blend of innovation and risk. As more and more individuals and institutions are drawn to the potential high returns of this digital frontier, the dark side of the crypto world becomes increasingly evident. Scams, thefts, and malicious activities have unfortunately become part and parcel of this landscape.

This article aims to provide a comprehensive look into the numbers, the platforms that are most affected, and expert insights on the current state and future predictions of the crypto market.

The Alarming Statistics

The Alarming Statistics

Over the past few years, the crypto community has been shaken by the staggering loss of over $26 billion to scams and thefts. This surge in malicious activities is not just a number; it's a reflection of the vulnerabilities and challenges the crypto world faces.

Consider this: In 2017, there were a mere 10 reported scams. By 2022, this number had grown exponentially to 364. The year 2021 remains etched in the memories of many as the worst-hit year, with losses amassing to an eye-watering $8.4 billion.

However, 2023 offers a silver lining. While the number of scams has reached 162, the total monetary value has seen a decline, dropping to $1.2 billion. This could be an indication of better security measures or increased awareness among investors.

The Evolving Threats and Predictions

One of the most concerning trends in recent times is the rise of "exit scams." These malicious schemes involve project initiators collecting funds from unsuspecting investors and then disappearing without delivering on their promises. The alarming fact is that the occurrence of such scams has doubled this year, making them a significant concern for both novice and seasoned investors.

Different crypto platforms, each with its unique architecture and user base, have shown varying levels of vulnerabilities. BNB Chain, for example, has grappled with over 100 security issues, leading to losses of $71 million. Ethereum, despite its vast popularity and widespread adoption, wasn't immune either. It faced 55 security breaches, resulting in a loss of $66 million. Meanwhile, Polygon, though smaller in scale, had its own challenges, with 4 major issues causing a loss of about $2.4 million.

Bitcoin: The Gold Standard of Resilience

Amidst the turbulence, Bitcoin emerged as a symbol of stability and resilience in the crypto realm. Experts and analysts often laud its robust features, attributing its relative safety to its decentralized nature, the unyielding Proof-of-Work system, and the immutability of its blockchain. These inherent features ensure that Bitcoin remains a challenging target for potential hackers and malicious entities.

A Look at July's Stats

July, in particular, stands out as a tumultuous month in the crypto timeline. The losses incurred in this single month surpassed $300 million. Exploits and exit scams were the primary culprits, siphoning off a massive $580 million from unsuspecting investors. Additionally, flash loan attacks, a sophisticated and relatively new form of crypto scam, led to losses of $255 million, highlighting the evolving nature of threats in the crypto space.

Read More: