Cryptocurrency investors lost more than $2.8 billion in 2021 as a result of ‘rug pulls,’ a colloquial name for a form of crypto scam.
Furthermore, the increase in scams coincides with an overall increase in crypto coin and token values this year, according to a report released by blockchain analysis platform Chainalysis on December 16.
With a total of $2.8 billion rug pulled, it equates to an average of $7.67 million stolen daily for all of 2021. Furthermore, while rug pulls contributed more than a third (37%) of the overall illegal funds from crypto schemes generated this year, they only accounted for 1% of the less than $5 billion in total illicit revenue by cryptocurrency scams in 2020.
Thodex exchange was the largest ‘Rug pull’
The disappearance of the founder of Turkish cryptocurrency exchange Thodex, together with more than $2 billion in customer assets, in April 2021 accounts for the vast bulk of the lost funds on the list.
The CEO of a large Turkish centralized exchange vanished shortly after the exchange suspended customers’ ability to withdraw funds from their accounts. In total, consumers lost more than $2 billion in cryptocurrencies, accounting for approximately 90% of the total amount of cryptocurrency taken in rug pulls. All of the other rug pulls in 2021, on the other hand, started as DeFi projects.
This was followed by AnubisDAO, which raised $58 million, and Uranium Finance, which was built on the Binance Smart Chain and raised $50 million.
AnubisDAO launched on October 28, 2021, promising a decentralized, free-floating currency backed by a basket of assets. Using a DOGE-inspired logo, however with no website or white paper and all developers using pseudonyms.
The scam generated approximately $60 million from investors in only a few days, all of whom got the project’s ANKH token in return for supporting the development’s liquidity pool. However, within 20 hours, all of the funds collected, which were predominantly stored in wrapped Ethereum (wETH), had vanished from AnubisDAO’s liquidity pool and had been transferred to a series of new addresses.
AnubisDAO received and held the wETH investors transferred to their liquidity pool in return for ANKH tokens using contracts executed with the Balancer Liquidity Bootstrapping Protocol.
Finally, one of the most recent rug pulls to feature on the list is the Squid Game (SQUID) token named after the popular South Korean Netflix (NASDAQ: NFLX) series.
Since the domain name was obtained only five days before analyzing the project’s most basic audit, concerns about the developer’s viability surfaced.
Finbold had warned investors before the incident that Squid Game investors were unable to sell their SQUID tokens. Despite the warning, investors flocked to the token in the run-up to the collapse. Only a few days later, the website for the Squid Game cryptocurrency was taken down and on November 1, the SQUID reached a peak of $2,861 before crashing to zero.
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