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Vigilantes help eliminate online fraud

Cryptocurrencies are all the rage now and everyone wants to jump on the bandwagon. On the other hand, cryptos have caught the attention of not only investors, but crooks as well. As regulators strive to crack down on frauds and scams, the nature of cryptocurrencies and the rate at which these scams occur make it difficult to eliminate them. But some crypto enthusiasts have now decided to help track down and expose these scams in the crypto space.

According to research from CipherTrace, a crypto intelligence firm, there have been $ 681 million worth of hacks, frauds and scams in the crypto world during the first half of 2021.

Tim Robinson, chief scientist at crypto-compliance firm Elliptic, told CNBC: “The DeFi ecosystem is an incredibly exciting and rapidly evolving space, with financial services innovation unfolding at the speed of technology. light.”

He added: “It attracts large amounts of capital to projects that are not always robust or well tested. Criminal actors saw the opportunity to exploit this.”

The rise and fall of cryptos like the “squid coin” has made it clear that fear of missing out – or FOMO – prompts many investors to forgo due diligence and proper research before investing. This is the “rug sweater” that the crooks rely on.

A carpet draw scam is a pump and dump system in which a developer / con artist lists a coin on an exchange and convinces investors to provide liquidity through aggressive marketing. Then they drain the coin’s cash pool, effectively pulling the rug from under investors’ feet and leaving them with nothing. This tactic can be easy to deploy as it is not difficult to mint digital coins online. However, a vigilante group called RugSeekers has taken on the task of spotting these scams, according to a Bloomberg article.

RugSeekers scan the source code of fraudulent coins, pricing tables, and wallets for red flags. They examine the social media presence of the fraudulent coin using channels such as Telegram (messaging app). If they find any clues of foul play, they spread the word about the scam on social media.

The group has reportedly investigated a crypto called “we save the moon”. After thoroughly browsing the coin’s telegram group and talking to the developers, questioning their methodology, the group concluded that the coin was a scam. They posted a warning on their Twitter account about the coin, but much to their dismay, the warning didn’t have the force they hoped for.

However, there is still a long way to go to control these scams. As US Securities and Exchange Commission Chairman Gary Gensler noted in a speech in August: “At the moment, we just don’t have enough investor protection in crypto. right now it’s more like the Wild West. “

(Edited by : Vijay Anand)

First publication: STI


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