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Recent security insights have indicated that cryptocurrency scams, particularly rug pulls, are on the rise, with Hacken's latest report shining a light on their prevalence. Released on October 25, the report delves into the third quarter's crypto hacking trends and how different projects have reacted to such threats.
Rug pulls have become the primary focus due to their surge in numbers. In such scams, the team behind a project artificially boosts their token's value before abruptly withdrawing the liquidity, leaving investors at a loss. Shockingly, over 65% of all cryptocurrency hacks in Q3 2023 were rug pulls.
Hacken's findings suggest that the consistent pattern of these scams is due to their ease of execution. It has been observed that recurring fraudsters resort to token factories to churn out dubious tokens on a large scale.
However, there's a silver lining. Hacken emphasizes that these scams are relatively straightforward to detect and avoid. Their primary advice to potential investors is to verify if a crypto project has been independently audited. When Hacken reviewed 78 rug pulls from Q3, a mere 12 claimed to have undergone an audit process.
However, an audit doesn't necessarily insulate against deceit. Hacken cautions investors to scrutinize the audit results diligently. A project may have an audit but still score poorly on security checks, a detail often overlooked by hopeful investors.
Dyma Budorin, Hacken's co-founder and CEO, highlighted that investor behavior often inadvertently supports these scams. He cited the success stories of memecoins like Pepe and Shiba Inu, where small, experimental investments yielded massive returns. Such success stories fuel a certain FOMO (fear of missing out) among potential investors, causing them to dismiss potential red flags.
Budorin added that scammers often exploit this mindset. They mimic successful projects, intensifying the FOMO and luring hopefuls into their trap. He added that the ease of crypto investments, which often involves just a few clicks, can induce hasty and impulsive decisions among users.
