If you read the hype, then you will have read that lack of regulation, speed of transactions, irreversibility of trades, and hidden identities are positive features of the crypto world. Crypto enthusiasts say that finance can only be improved by avoiding banks, regulators, and rules. But faster and looser isn’t always better when we are talking about your investments. In fact, it is a recipe for you to be defrauded out of your money.
Moving money quickly is the essence of crypto. It is also the essence of any organized fraud scheme. And once taken, cryptocurrency can be moved quickly and laundered to avoid detection.
CNBC reports that fraud and scams in crypto took $14 billion in 2021 “thanks in a large part to the rise of decentralized finance (DeFi) platforms.” This is separate from the $3.2 billion of cryptocurrency stolen in straight crypto theft hacking schemes. “More than $2.8 billion of this [fraud] total came from a relatively new but very popular type of scheme known as a “rug pull,” in which developers build what appear to be legitimate cryptocurrency projects, before ultimately taking investors’ money and disappearing.” This “relatively new” scam sounds like one of the oldest frauds in the book – the fake investment scheme. CNBC also notes that many of the new DeFi protocols have code vulnerabilities that hackers are…
