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Scams and Fraud in Crypto Markets See 41% Increase in 2022

The blockchain industry has experienced one of its worst years in history in 2022, but it has also been a profitable year for scammers targeting digital asset markets.

Matrix Style Codes
Matrix Style Codes

According to a blockchain risk monitoring firm Solidus Labs report, scam artists deployed over 117,000 scam tokens from January 1 to December 1, 2022, a 41% increase from the previous year.

The report also found that 8% of all Ethereum tokens are programmed to execute "rug pulls," while 12% of all BNB Chain tokens are alleged to be scams. Solidus Labs explained that many of these scammers use crypto-to-fiat exchanges to seed their scams and launder their profits. The report stated, "These fraudsters - benefiting from the fact that more than 99% of their malicious tokens have evaded detection under traditional approaches to scam identification - deposited and withdrew a combined $11 billion worth of ETH to/from 153 different centralized finance [CeFi] exchanges during the period we studied."

The scam tokens deployed in 2022 bring the total number since September 2020 to over 200,000, according to Solidus Labs. Almost 2 million investors have lost funds to rug pull tokens.

Bitcoin and Ether Prices Remain Stagnant as Scam Activity Increases

Bitcoin (BTC) was recently trading at $16,800 and remained relatively stagnant in the 24 hours leading up to the report. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite saw slight gains as investors processed cooler-than-expected consumer spending data.

Ether (ETH), the second-largest cryptocurrency by market capitalization, followed a similar trajectory to BTC, trading at around $1,218.

According to Glenn Williams Jr., momentum in the crypto markets is currently stagnant, with the Relative Strength Index (RSI) reading remaining in neutral territory. Trading activity in the past has shown significant price agreements between $16,500 and $17,000. Combined with the decline in volume typically seen at the end of the year, prices may remain at this level for an extended period of time. Both BTC and ETH are trading close to their 20-day moving averages and are expected to remain there in the near term.