The phenomenal rise of Bitcoin’s value from 50 cents in 2011 to almost $65,000 last November has resulted in the creation of many copycats. In 2022, it is believed that there are over 20,000 cryptocurrencies although about only 11,000 of them are actively traded. Last year, the rise in popularity of non-fungible tokens (NFTs) also resulted in a similar explosion in value and number.
Despite the promises many crypto and NFT promoters make, the truth is that most of them will fail and end up being worthless. A few of them probably had legitimate uses and business plans that just didn’t work out for one reason or another. But many of them were created with the intention of scamming unsuspecting people.
These scams typically come in two forms. The first is known as the pig butchering scam, where a scammer charms his victim with promises of quick riches in order to convince them to put money into a fake crypto account. The second is known as a rug pull, where fraudulent developers create a new crypto token or NFT project, pump up the price, and then pull as much value out of them as possible before disappearing. Unlike the pig butchering scams, which target individuals, rug pulls typically involve many victims because the promoters publicize their fraudulent project on chat groups and even on popular websites. These transactions have also been classified as Ponzi schemes since these scammers use other investors’ money to pay either initial investors or themselves.
These…
