“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.”
Read more of this story at Slashdot.
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