How much money have cryptocurrencies swindlers stolen in 2021?

Crypto investors lost more than $ 2.8 billion from Rug pulls, a common term for a type of crypto fraud, in 2021, according to a Chainalysis report.

The report added that the increase in fraudsters reflected the general rise in cryptocurrency prices this year.

What is Rug pulls?

Unlike other scams, such as fake giveaways or crypto wallet scams, Rug pulls involve manipulating the currencies' purchases within an exchange. In the case of Defi platforms, developers run a seemingly legitimate blockchain project that they then promote on social media before issuing their tokens to a decentralized exchange (DEXs).

The scam starts when the token enters the exchange:

 Investors buy the tickets to increase the price and provide liquidity to these projects in DEXs. When the project comes up live, liquidity groups can run into tens or even hundreds of millions of dollars in the next few hours or days.

 The scammers then pull the liquid from the exchange and leave the project.

The number one thing that shows that it is evident that this is a scam is that the developers of such projects do not "lock" the control over the total liquidity of the token in a DEX and, therefore, can withdraw it.

The second thing to look at before investing in a new token is the team behind it, their names, and their history on platforms like LinkedIn.

The third is if there is credibility behind the token itself if the project's whitepaper makes sense, and, more importantly, if this token is helpful in the daily life of the crypto community and the community of traditional investment media.

If a project promises 10000% returns in a week and will make its investors "rich" in a short time, then we should probably put on the skeptic's hat, take a step back and re-evaluate the project.

 Fraudsters have been, are, and will be in the investment space, so we must always research before making any investment move.

Our articles are for informational purposes only and do not replace specialized consulting services with professional experts.