Solidus Labs, a company that monitors cryptocurrency fraud, recently conducted extensive research into the murky world of crypto scams. After a period of monitoring 12 of the major blockchains, Solidus Labs found that Binance’s BNB Chain has been at the center of the vast majority of fraudulent tokens.
On October 27th, Solidus Labs reported that, since starting to monitor the 12 blockchains on October 10th, including Ethereum, Polygon, and BNB Chain, it discovered the existance of 188,525 smart contract scams. Solidus’ Vice President of Regulatory Affairs Kathy Kraninger further stated that the overwhelming majority of scams and rug pulls often don’t make the headlines.
BNB Chain Holds the Highest Number of Scams
Solidus Labs found that the most scams over this period occurred on Binance’s BNB Chain, as the study revealed that almost 12% of all BEP-20 tokens on the network were tied to scams.
According to the firm, Ethereum’s native ERC-20 token standard was the second most vulnerable to illicit action, with 8% of the blockchain’s tokens exhibiting scam-like traits.
1/ After four hacks yesterday, October is now the biggest month in the biggest year ever for hacking activity, with more than half the month still to go. So far this month, $718 million has been stolen from #DeFi protocols across 11 different hacks. pic.twitter.com/emz36f6gpK— Chainalysis (@chainalysis) October 12, 2022
The study further concluded that around $910 million in fraudulent ETH had passed through regulated and centralized exchanges. Polygon ranked as the third highest network in terms of scams, though just 1.2% of its tokens and smart contracts were tied to illicit activities. According to Solidus, these so-called “scam token smart contracts” are specifically designed to steal investors’ money in a more subtle form of other similar exploitative activities, such as rug pulling, in which developer’s drain the project of investors’ money.
On the Flipside
- According to DeFi Llama, BNB Chain is responsible for 10% of the overall value locked in DeFi, which translates to a total value of $5.6 billion. On the other hand, Ethereum, holds a TVL of $32 billion, which is equivalent to 58% of the total value locked in DeFi.
Why You Should Care
In today’s climate cryptocurrency investors have to contend with more than just scam projects, with the prevalence of hacks rising year on year. Data from analytics company Chainalysis reveals that October has been the most active month for hackers in crypto history. Smart contract scams are becoming increasingly widespread in the Web 3.0 and DeFi world, and Solidus Labs claims that it identifies 15 new scams every hour.
Read more about high-profile crypto crimes:
Record-Breaking NFT Artist Beeple Alerts Users To Discord Phishing Scam
Learn how to better recognize crypto scams:
How to Spot a Crypto Rug Pull Scam