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1/4 of the new cryptocurrency tokens appear to be scams

1/4 of the new cryptocurrency tokens appear to be scams

#cryptocurrency #tokens #scams Welcome to InNewCL, here is the new story we have for you today:

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If you’ve been searching for more reasons to be skeptical about the crypto market, here you are: Almost a quarter of the new coins minted on the blockchain that reached any value in 2022 match the on-chain properties of a pump-and-dump schemes. according to a report chapter by blockchain tracking and analysis group Chainalysis published on Thursday.

The company looked at all of the over 1.1 million new coins launched on blockchains in 2022. Most of them, unsurprisingly, never made any significant impact in the market – fizzled out with just a handful of trades to show the effort. But of the 40,521 tokens that managed to withdraw, 24% showed characteristics of an outright scam, according to Chainalysis’ assessment. This means that these coins experienced a 90% drop in price within their first week of launch.

Pump-and-dump scams occur when the holders of the bulk of an asset (in this case, the creators of cryptocoins) dump their holdings to others, triggering buyouts and artificial value inflation. Once the asset has skyrocketed in the market, the scammers are quick to give up what they have in exchange for a more stable token or cold hard fiat cash. The victims are left with a worthless shell of the investment they once bought into, hook line and sinker.

“Unfortunately, pump-and-dump schemes have also become common in the crypto world. This is largely due to the relative ease with which bad actors can launch a new token and set an artificially high price and market cap “on paper” by boosting initial trading volume and controlling circulating supply.” , wrote Chainalysis. “Also, teams launching new projects and tokens can remain anonymous, allowing serial offenders to run multiple pump-and-dump programs.”

But look, you may have heard that the crypto market has been particularly volatile over the past 12 months or so. Perhaps it is possible that the creators of these 9,902 tokens were not intentionally trying to enrich themselves at the expense and harm of others. Maybe those coins just crashed on their own.

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However, this seems like a less likely explanation given that Chainalysis compared their data to evaluations by Token Sniffer, another crypto transparency service, and found that all of the coins they reviewed received a trustworthiness zero. Also, many of them contained openly malicious code that prevented new buyers from selling their tokens — effectively capturing brands with their shoddy investment.

Overall, victims lost about $4.6 billion buying into these scams, while perpetrators made tens of millions of dollars in profits. To make matters worse, individual scammers have used the same strategy over and over again. 445 individuals or groups accounted for about a quarter of all suspected scams, and a single token creator was personally responsible for launching 264 suspected pump-and-dump coins in 2022, according to Chainalysis.

But crypto is not limited to just one type of scam. All manner of crypto-crimes — from money laundering and stolen funds to pig slaughtering and other romantic schemes — continued to thrive, largely unabated in 2022, according to the full assessment released by Chainalysis so far.

Even excluding some of the most notable cryptocurrency crashes, stock market failures, and alleged crimes over the past year (e.g., the collapse of FTX and Celsius), 2022 was still a record-breaking period for crypto crime. Illegal crypto activity hit an all-time high of $20.6 billion, according to an earlier part of Chainalysis’ annual cryptocurrency crime report released in January. This number is up more than $2 billion from 2021 and $12 billion from the previous year, despite a sharp decline in the value of the crypto market over the same period.

However, pump-and-dump scams are particularly easy to pull off and particularly damaging to crypto’s reputation, Chainalysis noted. “Pump-and-dump schemes are uniquely destructive in the cryptocurrency world due to the ease with which new tokens can be launched and the social media-driven nature of crypto investment news and discussion,” the report states company. “Many believe that cryptocurrency is nearing a tipping point that could spark mass adoption, but that might be difficult if the general public perceives cryptocurrency as full of pump-and-dump schemes designed to exploit newcomers,” added the review.

Perhaps the mass adoption of an unregulated financial market so prone to fraud, Skeevey founders engaging in bad business practices, and widespread Ponzi schemes (though some have called blockchain itself a grand pyramid scheme) isn’t such a good idea after all.

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