Smart contract frauds are becoming increasingly prevalent in the Web3 and cryptocurrency area, according to Solidus Labs, which claims to have discovered 15 new scams every hour on average.
On October 27, Solidus Labs announced that since starting to monitor 12 blockchains, including Ethereum, Polygon, and BNB Chain on October 10, it had discovered 188,525 smart contract scams.
As the vice president of regulatory affairs for Solidus, Kathy Kraninger, a former director of the United States Consumer Financial Protection Bureau (CFPB), stated in the statement that “while some of the big rug pulls and scams make the news [ā¦] the full picture stemming from our data shows the vast majority of these scams go unnoticed.”
The company also provided some insight into the percentage of tokens that are false, claiming that the BNB Chain, which uses the BEP-20 token standard, has the highest percentage of counterfeit tokens at 12%.
According to the business, 8% of the tokens on blockchains that use Ethereum’s native ERC-20 token standard are scam-like. Additionally, it calculated that centralized and regulated exchanges have handled almost $910 million in ETH related to scams.
In accordance with other abusive practices like rug pulls, in which the developer steals the invested funds, and token impersonations, which attempt to trick people into investing by imitating well-known cryptocurrencies, these so-called “scam token smart contracts,” according to Solidus, are hard-wired to steal investors’ funds.
According to the report, these contracts allow fraudsters to quickly carry out thousands of low-value attacks while keeping exchanges, regulators, and authorities in the dark. They are “automatically deployed and readily reproduced,” it stated.
Investors should be on the lookout not only for scams involving cryptocurrencies but also for hacks, which are on the rise. According to analytics company Chainalysis, October may have been the busiest month ever for crypto hacking activity.
In an interview, Kim Grauer, director of research at Chainalysis, stated that the great majority of cryptocurrency hacks target decentralized finance, with the amount of value stolen expected to reach all-time highs in 2022. (DeFi).
