350 scams a day: is the crypto industry doomed to collapse from within?

Number of token scams in 2020, 2021 and 2022

The year 2022 will be remembered and in the history of the young crypto industry for the worst of reasons. Disintegration of the TERRA ecosystem and the UST stablecoin, bankruptcy of celsiuspsychodrama FTX… Explosions that have deeply shaken the entire sector like so many flights of disastrous black swans, minus the rarity. Focus today on a less spectacular evil, but just as destructive: the now quasi-industrial production of scam tokens.

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2022: historic year for scams

According to the last study of the company specializing in the detection and monitoring of crypto scams Solidus Labthe year 2022 sets a sad record.

Indeed, this year has seen the creation every day of the staggering number of 350 cryptocurrencies (or tokens) “scam”, that is to say assets designed from the start to siphon money from investors who are a little too naive or greedy.

This is 41% more than in 2021 and literally 80 times more than in 2020.

Number of token scams in 2020, 2021 and 2022

What are scam tokens? Their nature is diverse, ranging from projects that are useless or that will deliver nothing more than a vague roadmap and some marketing promises, to “honeypot” devices, designed to give the appearance of a steady increase in the value of a token, but prohibiting their holders (via a dedicated smart contract) from… reselling their assets! We will think in particular of the SQUID token, of grim memory.

In this depressing ballet it is the Binance SmartChain (BSC), network launched by the eponymous platform, which leads the way by concentrating the majority of these scams. According to the study, it is thus 12% of all the tokens of the chain which would be concerned (compared to 8% for Ethereum).

There are two main reasons for this:

  • The confusion frequent in the minds of the most beginners between the Binance Smart Chain network, and the Binance crypto exchange, certain “projects” playing on the potential ambiguity (“our new cryptocurrency is listed on Binance”, a statement likely to shine eyes and open wallets),
  • The ease and speed disconcerting with which it is possible to create, without advanced skills, a token on the BSC, for a few dollars.

It will be recalled in this respect that by its decentralized nature and its very operation, there is no control authority or central monitoring body on a blockchain network.

Anyone can do literally anything in the matter and if the freedom and the underlying possibilities are immense, they must imperatively be accompanied by constant vigilance and a solid critical mind. so as not to fall into the crudest traps.

Two skills that are unfortunately often lacking in newcomers, sometimes more driven by the illusory hope of a quick enrichment than by the sincere desire to learn and understand the potentials of the industry.

>>Faced with threats, shield your defenses with Ledger (commercial link)<<

Token scams, cancer of the crypto industry

The Solidus Lab study shows that since September 2020, nearly 2 million people who lost money in these multiple scams.

That’s more than the number of victims of the FTX and Celsius bankruptcies combined.

Number of crypto scams
Distribution of victims of crypto bankruptcies vs token scams

But, the evil is more insidious, less spectacular and for all that, perhaps more worrying by its systemic dimension.

Indeed, hundreds of thousands of investors are affected more or less harshly by these scams. Contrary to resounding bankruptcies, these sometimes small-scale scams do not necessarily make the headlines of the specialized press and most often leave little hope for the slightest prospect of recovering funds through the legal process, for lack of clear identification of authors.

It is thus a whole generation of aggrieved investors who maintains a deplorable image of the crypto sector, slowing down its overall adoption.

Is all hope lost, in an ecosystem rotten from the inside and studded with traps of all kinds, just waiting to close in on the beginner or the average investor? Luckily not! The industry is full of many beautiful projects and healthy initiatives that pave the way to investment and Finance 2.0.

It will simply be necessary, and probably more than in other sectors, to equip yourself with the right tools and acquire the necessary skillset to become an enlightened crypto investor, or a vigilant explorer of the future Web3. This skill acquisition phase is not only important and useful: it is essential.

Faced with the proliferation of token scams, stick to safe bets: Bitcoin, Ethereum and your carefully selected favorite cryptocurrencies, all stored safely in your Ledger wallet (commercial link).

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