Crypto Scammers Rip Off Billions As Pump-and-Dump Schemes Go Digital (bloomberg.com) 74
Bloomberg identifies a variety of cryptocurrency scams, including a "rug pull," where the creators of a new cryptocurrency suddenly cut and run.
"Old-fashioned Ponzi schemes, newly cryptodenominated, have swindled people out of billions too," Bloomberg adds. And a 35-year-old crypto trader living with his parents ("trading meme coins as a full-time job") also tells them about "honey pots," where a coin's creators see a spike in value — and then temporarily disable selling for other holders: It might sound like a joke, given the crypto meltdowns of late, but serious money is at stake here. Billions — real billions — are getting pilfered annually through a variety of cryptocurrency scams. The way things are going, this will only get worse. Back in the Wall Street Dark Ages — six, 12, 18 months ago — these sorts of shenanigans were mostly associated with shlocky brokerages like the one depicted in the 2013 movie The Wolf of Wall Street. In those halcyon days before GameStop, Dogecoin and the rest, schlubs on Long Island might pitch ridiculous over-the-counter stocks to the gullible...
Tokensniffer, aptly named for Shit Coins, claims to have tracked 42,071 tokens and 2,250 scams or hacks. That was as of June 16. More than 200 supposed stings were logged by users during the first two weeks of June alone... His website scrapes data about new meme tokens from popular social media channels and scans the source code... A "smell test" program searches for vulnerabilities. Clones of existing meme tokens are often a red flag. Most recent scams — the site flagged 450 in in one recent 30-day period — were honeypots. Those tend to be easier to spot because of their code, Tokensniffer's creator says. Rug pulls are more complicated.
Such supposed safeguards aside, people are getting scammed in growing numbers. So far this year, over $2.6 billion has been grabbed, according to Chainalysis, a New York-based blockchain researcher. That figure doesn't include a giant Ponzi scheme that just came to light in South Africa. Local authorities put the haul at $3.6 billion worth of Bitcoin. Gob-smacking as all of this might sound, these numbers in fact represent a marked decline from 2019, when fraudsters walked away with an estimated $9 billion. But here's a key difference: the sheer number of people getting hoodwinked. With a few outsize exceptions, most crypto scams seem to be getting smaller. That's the good news. The bad news is that there are more of them, and more people are getting stung. From 2019 to 2020, the number of victims has jumped 48% to an estimated 7.3 million, a figure approaching the official population of Hong Kong. Between the last three months of 2020 and the first three months of 2021, the number of unique scams rose nearly 18%, to 1,335, according to Chainalysis...
Michael Burry, of "The Big Short"-fame, has been warning all of this could all go horribly wrong. An estimated 10,000 new coins have been minted this year. Who can say how many will turn out to be shams? So many Shit Coins are flying around out there, and prices can be so volatile, that many people can't even tell if they've been scammed... This much is sure: no one complains when they're making money. It's when people start losing money — and lately, many have been — that they scream they've been taken.
"A decade after Bitcoin was created, regulators are still grappling with how to police cryptocurrencies," Bloomberg adds, "when the whole point is that they operate without governments or central banks."
"Old-fashioned Ponzi schemes, newly cryptodenominated, have swindled people out of billions too," Bloomberg adds. And a 35-year-old crypto trader living with his parents ("trading meme coins as a full-time job") also tells them about "honey pots," where a coin's creators see a spike in value — and then temporarily disable selling for other holders: It might sound like a joke, given the crypto meltdowns of late, but serious money is at stake here. Billions — real billions — are getting pilfered annually through a variety of cryptocurrency scams. The way things are going, this will only get worse. Back in the Wall Street Dark Ages — six, 12, 18 months ago — these sorts of shenanigans were mostly associated with shlocky brokerages like the one depicted in the 2013 movie The Wolf of Wall Street. In those halcyon days before GameStop, Dogecoin and the rest, schlubs on Long Island might pitch ridiculous over-the-counter stocks to the gullible...
Tokensniffer, aptly named for Shit Coins, claims to have tracked 42,071 tokens and 2,250 scams or hacks. That was as of June 16. More than 200 supposed stings were logged by users during the first two weeks of June alone... His website scrapes data about new meme tokens from popular social media channels and scans the source code... A "smell test" program searches for vulnerabilities. Clones of existing meme tokens are often a red flag. Most recent scams — the site flagged 450 in in one recent 30-day period — were honeypots. Those tend to be easier to spot because of their code, Tokensniffer's creator says. Rug pulls are more complicated.
Such supposed safeguards aside, people are getting scammed in growing numbers. So far this year, over $2.6 billion has been grabbed, according to Chainalysis, a New York-based blockchain researcher. That figure doesn't include a giant Ponzi scheme that just came to light in South Africa. Local authorities put the haul at $3.6 billion worth of Bitcoin. Gob-smacking as all of this might sound, these numbers in fact represent a marked decline from 2019, when fraudsters walked away with an estimated $9 billion. But here's a key difference: the sheer number of people getting hoodwinked. With a few outsize exceptions, most crypto scams seem to be getting smaller. That's the good news. The bad news is that there are more of them, and more people are getting stung. From 2019 to 2020, the number of victims has jumped 48% to an estimated 7.3 million, a figure approaching the official population of Hong Kong. Between the last three months of 2020 and the first three months of 2021, the number of unique scams rose nearly 18%, to 1,335, according to Chainalysis...
Michael Burry, of "The Big Short"-fame, has been warning all of this could all go horribly wrong. An estimated 10,000 new coins have been minted this year. Who can say how many will turn out to be shams? So many Shit Coins are flying around out there, and prices can be so volatile, that many people can't even tell if they've been scammed... This much is sure: no one complains when they're making money. It's when people start losing money — and lately, many have been — that they scream they've been taken.
"A decade after Bitcoin was created, regulators are still grappling with how to police cryptocurrencies," Bloomberg adds, "when the whole point is that they operate without governments or central banks."
Here's what I know (Score:4)
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The difference is the scale. A crook with some sort of creative scheme with digital currency can rip off a few orders of magnitude more money than some guy trying to bilk little old ladies in the casino.
Bitcoin Maximalist (Score:1)
Bitcoin Maximalist [urbandictionary.com]
A low IQ, low energy Bitcoin-loving bigot who thinks that any coin that has not been approved by the maxis ("shorthand for Bitcoin Maximalist"), should be thought of and labeled as a shit-coin. They are considered to be narcissistic, toxic, heavily opinionated and ill-mannered. A bitcoin maximalist will come in hot in almost any discussion but will not answer coherently, especially when their views are debunked.
Some refer to bitcoin maximalists as crypto-thought police, as they often
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"There's bitcoin, and then there's shitcoin." Congressional hearing
Said by a republican, so you know they're in the pump-and-dump game for their own greed and benefit.
Oh, but it's everybody else that are the scammers, according to Pyrite Pete the bitcoin shitposter!
Re:Here's what I know (Score:5, Informative)
High-tech suckers are suckers. What's new... That's the only common feature between scams of yesteryear and crypto-scams.
In fact, I'd argue that the very nature of cryptocurrencies is highly likely to attract even more suckers: at least with good ole greenbacks, if a deal sounds too good to be true, you have a good chance to realize that's because it is. But even honest cryptocurrency deals that everybody has been hearing about ad nauseam year after year make stupid and unlikely appear almost normal and expected. It's easy for crooks to convince suckers they can strike it rich with bitcoins when they keep hearing about people becoming virtual billionaires overnight just by sitting on some oversized hex digit for long enough.
Crytpo's actually worse (Score:3)
Second, law enforcement hasn't caught up to crypto scams, and crypto is already so dodgy by it's very nature that it can be hard to tell the difference between a scam and an actual crypto asset. Would you think Dogecoin would be a real thing?
Re: Crytpo's actually worse (Score:1)
How would you extract any money out of a crypto shutdown ? Crypto contains nothing of value. The calculations done at great sunk cost are useless and worthless for any other purpose post shutdown.
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How would you extract any money out of a crypto shutdown ? Crypto contains nothing of value. The calculations done at great sunk cost are useless and worthless for any other purpose post shutdown.
You take the real money that has been given to you, and run off with it. Doesn't matter what happens to the coin, because you have the real money now.
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Seemingly the Minsky cycle needs: low interest rates, a shift in technology, inability to objectively value something and the lure of getting effortlessly rich... Also, "but this time it's different".
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We're not doing a good job against people doing it the physical economy, not sure why we believe it will be any better within the crypto economy.
Because... blockchain! ;)
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Customer-centric synergistic blockchain!
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Quite true. Too many fools and too many people willing to profit from that. A giant circle-jerk when there would be actual problems to be solved...
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The difference is trace ability, how easily can you get away with the crime. So try to steal a million dollars in cash from you, I have to steal it from your bank, very trace able. I want to steal a million dollars worth of crypto I just have to catch, waterboard you until you talk and then drown you. Apparently you did not have the bit coin you claimed to have. File and password and well, who owns what. The difference is profound corruption in cash is a order of magnitude less risky that corruption in bit
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Not a damn thing. But the scams in the crypto world don't seem to be that different than they do in the physical money world. Grifters and scammers latch on to anything and everything they can to make a buck. We're not doing a good job against people doing it the physical economy, not sure why we believe it will be any better within the crypto economy.
That's why they have the same names. It's just a different and possibly more efficient way to scam idiots. The interesting part here is that they are managing to make billionaires trade money for vapor.
Digital coinage has no value to me. (Score:3)
I know it won't, but the existing digital coins can't crash and die fast enough.
Re: Digital coinage has no value to me. (Score:1)
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Anonymity: does it really matter?
Decentralized: current US dollars are not centralized either.
Security: any currency is only as secure as whoever is holding it for you. (many are learning that the hard way)
Guarantees: legal tender has this, these new things don't.
Between storing a number or storing a list of serial
Re: Digital coinage has no value to me. (Score:2)
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The Paper is mere there to let you know it represents something.... Crypto currency is the future and its transition will go faster than you think.
Thanks. I'll remember that after the next hurricane here and the power is out for 3 days all over the city and I'm still using some paper money -- but wishing I had some <meme>-coin instead -- to buy things ...
Re: Digital coinage has no value to me. (Score:2)
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I'll remember that after the next hurricane here ...
You fail to understand the principle but that is OK the smart ones already left Tornado alley long time ago.
Not really, I understand "the principle" pretty, just don't agree with it. And I live in Virginia Beach -- the smart ones realize that hurricanes don't usually happen in Tornado alley but, you know, near the oceans ... :-)
Re: Digital coinage has no value to me. (Score:2)
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Crypto currency is the future and its transition will go faster than you think.
Yeah, I don't know about that. The vast majority of people seem to like a physical currency; I don't see that changing much for quite a while, if ever.
Re: Digital coinage has no value to me. (Score:2)
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Physical you mean by creditcard or debit card?
No, I mean actual cash.
Re: Digital coinage has no value to me. (Score:2)
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Over 70% of US households have CC debts. So no, cash is not preferred.
What percentage of US households have or use cash? 100%. That seems like it's more than 70%, but you may want to check my math.
Anyway, try again. Just because people use credit cards doesn't mean they'd prefer not to have or use cash.
BTW, my consumer debt is zero. It feels good.
Re: Digital coinage has no value to me. (Score:2)
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The vast majority of people seem to like a physical currency; I don't see that changing much for quite a while, if ever.
Debt are not bad as long as you control them. You can make money on debt...
Is that you, Donald?
Re: Digital coinage has no value to me. (Score:2)
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Ssst....nobody seems to know it is me. Even Melanie does not know I am here.
You mean Melanoma?
Re: Digital coinage has no value to me. (Score:2)
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The only easy-to-handle "anonymous" money I've found so far is regular cash.
Cash is surprisingly easy to track (Score:2)
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because as soon as you try to spend more than a few thousand in one go it triggers all kinds of reporting requirements.
Cash transactions over $10,000 are supposed to be reported (IRS Form 8300 [irs.gov]), which is hardly "a few thousand". I imagine the government will impose that requirement on digital currencies too at some point.
Re: Digital coinage has no value to me. (Score:2)
Re:Digital coinage has no value to me. (Score:4)
I shall proceed to pull numbers out of my rear here, but I would wager that 99% of the people into cryptocurrencies right now arent in it for the tech, or the solutions, or to circumvent laws.
They just want to get rich quick. They want to buy low and sell high. FOMO is one hell of a drug, and for every over-night-millionaire story we hear of, there are hundreds of scam stories that we hear of but get forgotten very fast.
Oh well. A fool and his money are soon parted. An age old saying that never goes out of style.
Re: Digital coinage has no value to me. (Score:2)
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I bought my first Bitcoin today and for years I thought exactly the same as you: that BTC's value is precarious because people are choosing to use it today but it could end up out of fashion, potentially illegal or who knows ... the value could disappear overnight for a wide variety of reasons as it has no practical value other than as a currency.
So why did I choose to start buying it? As a hedge against inflation. The classic hedge is precious metals. They're volatile too but at least gold and silver has u
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Only risking what you are willing to lose is smart - but many are unable to do that. As for inflation, the near zero interest on savings accounts (vs inflation it's negative interest) is driving us all to the stock market. It is a stupid situation.
Re:Digital coinage has no value to me. (Score:4, Interesting)
Here's thing: bitcoin was not meant to be a stock. But that is all it has become. Speculation.
It's funny, because that's what it was always going to become, and that was what skeptics saw from the beginning.
Re: Digital coinage has no value to me. (Score:2)
Iâ(TM)m a sceptic by nature, so I can appreciate this⦠but I gotta say, weâ(TM)re always pooh-bahing things. That doesnâ(TM)t mean we should look back on this one particularly and say âoesee? We were right!â
50% of the time, sureâ¦
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I think you (and your reply) mean "pooh pooh"
Pooh Bah
or Pooh-Ba, poobah
noun (often lowercase)
a person who holds several positions, especially ones that give him or her bureaucratic importance.
a leader, authority, or other important person:
one of the pooh bahs of the record industry.
a pompous, self-important person.
pooh-pooh
verb (used with object)
to express disdain or contempt for; dismiss lightly:
He pooh-poohed all their superstitious fears.
verb (used without object)
to express disdain or contempt.
Re: Digital coinage has no value to me. (Score:2)
Makes sense (Score:2, Insightful)
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Bitcoin and the like are scams themselves. There's not a single legitimate crypto currency.
They're all a con. [urbandictionary.com]
Safemoon. (Score:2)
I mean, the very name is suspicious and it was very aggressively astroturfed to where it was being spammed in chats on twitch and youtube. There's no way that isn't going to be a rugpull.
You're Confused (Score:1)
Zero/negative interest rates promote this a lot (Score:4)
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If you don't want your money to sit in a bank collecting 0% interest, then invest it in stock market index funds, which have a 10% average annual return. Why would you take your chances with crypto when index funds are an option?
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Agreed. I am arguing index funds vs crypto. Index funds are risky, but crypto is much more risky.
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Coinbase is offering 4% APY on USDC deposits. This is probably the safest possible way to dip your toes into crypto. It's still crypto, it's all new, so yeah still some risk, but minimal here.
A fool and his money.... (Score:4)
... soon do part ways. Crapcoins (and they are all Crapcoins) are just a more modern way to implement that. The human race has plenty of fools that think they know more than others, but in reality do not even understand the basics of how things work. Rich pickings for the scammers. The only thing that annoys me is the collateral damage like expensive graphics cards.
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I swear I was going to post exactly the same comment, with the same subject and all.
They're not getting pilfered from me. Why? I invest my money in pretend happiness, not pretend money.
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I swear I was going to post exactly the same comment, with the same subject and all.
It is kind of obvious to anybody with a working mind. Seems we are a minority these days though.
This is why BTC (Score:2)
Good Thing (Score:2)
It's actually a good thing for retail investors to wise up and have to learn to think critically about financial fundamentals. When you understand what a "rug pull" actually is in the context of a liquidity pool, you can't help but look at how the US disconnected the dollar from gold and realize the USD is the biggest rug pull scam in the history of the world.
Unregulated (Score:3)
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I got this (Score:3)
"An estimated 10,000 new coins have been minted this year. Who can say how many will turn out to be shams?"
OOOH OOOH I know this one!
The answer is "virtually all of them".
Crypto Snakeoil (Score:2)