back to article Cryptocurrency 'rug pulls' cheated investors out of $8bn in 2021 – report

First, come up with a catchy name for a cryptocurrency project. Next, convince the credulous to buy associated digital tokens. Finally, abandon the project and keep investors' funds. This "rug pulling" scam lacks sophistication but evidently it works. According to Chainalysis, a blockchain data biz, separating cryptocoin …

  1. elkster88


    "The website currently has flagged 66,239 crypto tokens as potentially problematic"

    I've got a better number- all of them.

    1. Sorry that handle is already taken. Silver badge

      Re: 66,239

      Bitcoin: a naive experiment that precipitated countless scams

      Ethereum: a naive experiment that facilitated countless scams

      Litecoin: a naive experiment that turned into a scam

      Dogecoin: a joke that turned into a scam

      All the rest: Copycat scams.

      1. Dave314159ggggdffsdds Silver badge

        Re: 66,239

        "Bitcoin: a naive experiment that precipitated countless scams"

        Naive? Experiment? It was/is neither. The perpetrators are scammy scumbags who knew exactly what they were doing.

        1. Sorry that handle is already taken. Silver badge

          Re: 66,239

          Sure, with the benefit of hindsight, the results were inevitable.

          However a reading of the bitcoin white paper suggests the creator(s) truly believed in what they were doing. They thought they could create a "better" currency, but you could only believe that if you don't understand how currency works. They also thought that proof of work was a good solution to the problem of trust. The list goes on.

          1. Steve Channell

            Re: 66,239

            Evidence of Financial libertarianism is evidenced by "Satoshi Nakamoto" not selling the stash of coins E had accumulated during six-months of testing before launching bitcoin.

            "proof of waste" has proved effective as a mechanism for trustless truth, but CBDC won't use it to scale DLT.

            Since the dawn of time, a percentage of surplus wealth has always been lost to theft - crime has almost always been more expensive than tax.

            1. Snake Silver badge

              Re: the stash

              "Evidence of Financial libertarianism is evidenced by "Satoshi Nakamoto" not selling the stash of coins E had accumulated during six-months of testing before launching bitcoin."

              That statement makes no logical sense.

              Why would "Satoshi Nakamoto" try to sell his/her stash of coins before launching Bitcoin? Before the launch, the crypto "currency" had no value because the value of crypto is only from people's worth in their willingness to trade it.

              It had no trading history, because it was new, and therefore it had no value as a complete unknown.

              The current value of Bitcoin is exclusively due to people assigning a value to it, today. It has no intrinsic value - it has no material existence, therefore you cannot place an equivalent worth of the Bitcoin against something else beyond what your mind believes is true (note for naysayer, this is against fiat currencies where the value of the material goods of GDP is the basis of the currency, sorry if you can't understand that basic concept).

              1. Anonymous Coward
                Anonymous Coward

                Re: the stash

                "That statement makes no logical sense."

                Did you consider that the meaning was that the testing was before the launch, and that during testing bitcoins were "mined", and that subsequently SN has not sold them?

              2. This post has been deleted by its author

              3. batfink

                Re: the stash

                It's the Greater Fool theory again, which has been understood in financial circles forever.

                Art trading is a good example, but at least with a work of art you could hang it on the wall. Unless it's an NFT of course.

              4. Steve Channell

                Re: the stash

                "Satoshi Nakamoto" spent six months mining bitcoins as an initial load to use all the small prime numbers. That initial stash of coins has never been exchanged and remains on the blockchain.

                If the coins were now exchanged for FIAT currency, the gain would have to be declared and tax paid. Financial Libertarians don't believe the government should be able to create new money (quantitative easing), and see cryptocurrencies as a way to displace government.

                With the market value of "Satoshi Nakamoto" stash running into billions, a sensible strategy would be to diversify some of the "wealth" into other assets - the fact it has not suggests he/she is a Financial Libertarian.

                1. Steve Channell

                  Re: the stash


          2. Alan Brown Silver badge

            Re: 66,239

            Looking at Bitcoin and the original stuff that went with it I was always convinced that what I was looking at it was related to the hashcash smtp mail postage stamp project

            I could be (and probably am) wrong

            The problem with Cryptocoins isn't that they exist - they're fine for transactional use - issues start when you attempt to use them as a "get rich quick" speculative vehicle. Like any pyramid, only the first few levels make any money

            1. Anonymous Coward
              Anonymous Coward

              Re: 66,239

              Transactional use that tends to cost quite a bit more than "a few trees" for every transaction does not make them "fine [for] transactional use".

              The fact that c-coins are (still) almost entirely unregulated means scams are easier to perpetrate (and even frequently get away with).

              Every one of them seems to be a "get rich quick" speculative vehicle as well. Whether it's "buy all available GPUs to mine faster", or "steal low, sell high"...

      2. werdsmith Silver badge

        Re: 66,239

        Here's another angle.

        Bitcoin: something that I played with as an experiment because I was curious about what it was all about, and ended up paying off my mortgage and buying me a new car.

        1. Jedit Silver badge

          "Here's another angle."

          That doesn't make Bitcoin a success. It just means that you're one of the scammers instead of one of the scammed.

  2. Anonymous Coward
    Anonymous Coward

    At what stage will the authorities broadcast a public information advert detailing why Crypto-currencies are scams ?

    All and sundry (football clubs) are getting in on the act :

    1. Anonymous Coward
      Anonymous Coward

      Likely never. The most immediate problem is that while they're all scams (which should be obvious to everyone), there's no really compelling way to explain why they're scams that doesn't implicate fiat currencies equally. That may not stop them trying but nothing they say will be compelling.

      More importantly, if they intended to put a stop to this they'd have done so by now. Early on, the primary if not sole losers would have been the creators and early adopters; ie, those who set up the scams. So simply making it illegal to exchange a fiat currency for a cryptocurrency wouldn't have done much harm. Doing that today would lead to significant losses for the millions who have been scammed into parting with nontrivial amounts of fiat currency to purchase cryptocurrencies. Were all of them to lose the unrealised fiat-terms appreciation that would be a major political headache, but recent victims will be out 5- and 6-figure fiat sums that represent their basis. It's not likely that the authorities are willing to own that. There may even be systemic risks developing now: with fiat monetary policy so absurdly easy worldwide for so long, enormous sums have been borrowed into existence and used to purchase cryptocurrencies. Some of that debt is owed to banks and exchanges, and I doubt anyone has looked seriously at how much effect there would be on the (real-ish) banking system if all that debt suddenly became impossible to repay.

      Sorry to say, cryptocurrencies are here to stay. The authorities who should have shut them down years ago couldn't possibly act at this point. Instead they will "regulate" them, which means stamping out the most egregious rug pulls and Ponzi schemes but generally accepting that the creators of these schemes are not going to be punished and the early adopters are going to be allowed to keep their millions. Expect to see taxes and bank fees jacked up and semi-anonymous features neutralised. Governments and banks (practically no difference between them anyway) lost the chance to beat these criminals so they'll do what they've always done and join them. Which in fact is pretty much the history of fiat currency too, to bring it full circle. History's a bastard of a teacher.

      1. This post has been deleted by its author

      2. ecofeco Silver badge

        Until you learn how modern currency works, just stop with the "fiat" bullocks.

        1. Anonymous Coward
          Anonymous Coward

          Not everyone who disagrees with a broken and corrupt system is ignorant of its mechanism, so consider forgoing the ad hominem next time. Modern central banking (and, yes, the fiat currencies it debases) is a scam designed to crush the middle class and hand its wealth to the elites in banking while making the newly poor dependent on socialist governments who buy votes cheaply with the same bad money. It's worked very well. Cryptocurrency is a scam designed to concentrate wealth in the hands of the original scammers in the same manner as any pyramid scheme, at the expense of our fossil fuel stocks, real economy, and a livable climate. It too seems to be working very well.

          In the interest of honest disclosure, I neither owe fiat currency to anyone nor participate in government, nor do I have an economic interest in any cryptocurrency, "smart" contracts, tokens, etc. nor any business engaged in this area. May I ask how, if at all, you personally benefit from either or both of these scams?

          1. This post has been deleted by its author

          2. yetanotheraoc Silver badge

            "Not everyone who disagrees with a broken and corrupt system is ignorant of its mechanism"

            Not everyone who disagrees with you is ignorant of why you use the word fiat. All kinds of monetary systems can be broken and corrupt, implying brokenness and corruption is inherent in a particular monetary system is wrong.

            "I neither owe fiat currency to anyone nor participate in government"

            Even a simple thing like posting here is to a certain extent participating in government.

            1. This post has been deleted by its author

            2. Terry 6 Silver badge

              Does this poster then only buy electricity through a PAYG meter? Ditto phone and broadband contract. Pay rent ( not having a mortgage ) in advance. Ditto water bills.

              Otherwise they're all debts . Each one is a credit agreement.

              Does he not use the streets? Repaired ( in theory- I live in Barnet) by local govt. financed mostly by central govt. That's participating in government. And presumably has no kids. A state education system paid by taxes- that's a political decision, accepting the National Curriculum is a political act. Choosing to use a private school instead is equally a political act. They all mean participating in government simply by accepting the rules set out by each of those authorities. Challenging them while using them is participation in the process of government as much as is accepting it.

              I guess I'm calling BS.

              1. Anonymous Coward
                Anonymous Coward

                No, I do not. All electricity I use is generated on site using my own facilities. Likewise water. My Internet service is prepaid. I have no credit agreements with anyone and owe no debts. There are no streets here, only a bad road the local government owns but does not maintain or improve; I do that along with a couple of neighbours. My only interaction with the government is defying it; I do so as infrequently as possible but no less frequently than necessary.

                1. claimed

                  Prepaying is still paying toward a system that's built on integration, you moron, even if you pay in cabbages you pull out of your ass.

                  You think an Internet service provider could raise the capital required to lay the nationwide infrastructure required to provide your Internet connectivity without the guarantees of governmental/political system assuring a profit turning business for the time required to repay the debt, or on the ownership of land or the protected concept of 'property'?

                  Don't tell me it's wireless; there are protected radio frequency bands, and don't get me started on satellites...

                  You're *benefitting* from your government, not opposing it, - the fact you're quiet just helps politicians ignore you.

                  Who will you call if your (by the sounds of it, very desirable) setup is vandalised/stolen? ...probably the police, right? (Or are you sheriff in town too... in which case also paid for by... hold on a second...)....

                  ...Raise an army, then try opposing your government and let me know on the results.

          3. Alan Brown Silver badge

            calling it a fiat currency or anything else doesn't change the elephant in the room:

            A currency only has value whilst people believe it does. The moment that changes there's a run on it

            The USD has quadrillions of debt behind it, essentially making its value negative, but as a trading token that really doesn't matter - until it does (ie: people start using another currency as the default international trading token) and at that point all the debt becomes due instead of being able to be repaid in more of the same trading tokens. This is what happened to GBP when USD took over as the default international trading currency after WW2

            If you look at US foreign policy as "ensuring USD remains the default international trading currency" then a lot of things start making more sense. Use of Euro and Rembini for international settlements are a direct threat to USA national security

            1. Clausewitz 4.0
      3. Anonymous Coward
        Anonymous Coward

        It only "implicates fiat currencies" if you believe in false equivalency arguments. Unfortunately, those most likely to scream the loudest are also the least skilled in logic.

      4. Not Yb Bronze badge

        All cars are fiats...

        I'd just like to point out that ALL currencies are fiat currency, it's just the particular fiat that's different.

        In the case of the USD, it's "full faith and credit of the USA".

        In the case of local town 'dollars' it's "businesses and customers believing the currency is worth something".

        In the case of most cryptocurrencies, it's "belief of people using the currency that it's worth something".

        Very early on, that faith in bitcoin was so slight, that it took 10000 bitcoin to get a pizza delivered.

        Each currency is officially worth only that currency, everything else is the result of belief among people, banks, and other financial groups, that exchanging will be profitable.

    2. Anonymous Coward
      Anonymous Coward

      The BBC (World Service) also have The Missing CryptoQueen podcast

      (OneCoin ponzi scam)

      1. iron Silver badge

        An interesting story that one. Its just a shame the journalist is so stupid I couldn't put up with him until the final episode and quit a few before the end.

        1. Alan Brown Silver badge

          One of the things that should sink in is that if journalists regularly get it utterly badly wrong on subjects you DO know about, you should expect they're equally bolloxing things up in stuff you don't know about too

          I've seen very few who didn't want to push a particular barrow or even worse had Dunning-Krugered themselves. It's sometimes a relief when they cover stuff they're completely ignorant on because they screw things up so badly that _everyone_ can see it

          1. batfink

            Remember that journalists, by and large, studied non-techo subjects at school/university, so can be largely deficient in knowledge in the hard sciences.

            They are notorious for being bad at numbers, which is why politicians (usually equally as bad with numbers) keep getting away with simple bollocks like quoting gross expenditure to hide actual reductions.


            Politician: "We've increased spending on education this year to £XXBn!!!!"

            Numerate person: "Er, there are more students this year. Doesn't that mean that you're spending £YY less per student then?"

            Politician: "We're increasing police funding by 10% this year!!!"

            Numerate person: "Er, didn't you cut it by 30% last year? So this is now 10% of the reduced figure?"

          2. Disgusted Of Tunbridge Wells Silver badge

            > regularly get it utterly badly wrong on subjects you DO know about, you should expect they're equally bolloxing things up in stuff you don't know about too

            And that is why I stopped watching QI.

            There's an atomic clock in every PC, don't you know?

    3. iron Silver badge

      According to the TechMeme Ride Home podcast recently, English football fans have spend over £262m on these club tokens. And yet there are only a handful of Premiership clubs who have issued them - either the lower divisions are raking it in or those few clubs are screwing their fans for huge sums.

      Closer to my own heart, MotoGP are also getting in on the act. They recently had sports coin brand Bitci (pronounced "bitchy" apparently) as a race title sponsor so its only a matter of time before Dorna decides to scam their fans with MGPcoin.

  3. Doctor Syntax Silver badge

    "Scams represent a huge barrier to successful cryptocurrency adoption"

    I'm sure there are a few people out there who think the complete opposite.

    It never ceases to amaze me that there are people sufficiently astute to amass large wodges of cash who are then insufficiently astute to fail to spot these scams.

    1. ecofeco Silver badge

      I will never not be amazed myself. How do people so effing stupid get so much money? Ah well, "fools and their money..."

      ...DESERVE to be parted.

      1. werdsmith Silver badge

        The VAST majority of people involved have made good money out of it. People like to shine a spotlight on the failures because they feel a bit like they have missed out on an opportunity. It makes them feel a bit better about it.

        1. Halfmad

          I don't believe that for a second. I do however think that a VAST majority of people involved CLAIMED to have made good money out of it.

          Nobody likes admitting they lost money on something like this to people they know.

    2. the Jim bloke

      Scams represent a huge barrier to successful cryptocurrency adoption


  4. Peter Prof Fox


    Would you accept my 10-Frufru banknote from the Bank of Ohmygiddyaunt?

    What happened to sense? It used to be common.

    1. Sorry that handle is already taken. Silver badge

      Re: Gosh!

      What happened to sense? It used to be common.

      Scams are as old as time so I'm not so sure that's true!

      Pyramid schemes are cyclical and come around about once a generation once the new pool of suckers has once again grown large enough. Kleptocurrency appears to be this generation's version.

    2. Doctor Syntax Silver badge

      Re: Gosh!

      "What happened to sense? It used to be common."

      That was just getting rid of the difficult bit in the title.

  5. Sorry that handle is already taken. Silver badge

    "dodgy crypto projects"

    But you repeat yourself

  6. ecofeco Silver badge

    But it's the coolest new thing!

    "People don't like crypto because it's the newest thing and they are all just old farts who don't understand!" says the bleating tech douche bros edgelords.

    But hey, it's your money. You screw you. The great pyramids of Tulip, Ponzi and Maddoff, thank you.

    1. yetanotheraoc Silver badge

      Re: But it's the coolest new thing!

      "Maddoff" (sic)

      That might be the first time I have seen Madoff without Bernie prepended. Maybe that's why I never before noticed the nominative determinism. Alternatively, I am just slow on the uptake.

      1. Anonymous Coward
        Anonymous Coward

        Re: But it's the coolest new thing!

        There is also the same sleaziness to many of them and bluster that a certain now banned fanatical tweeter constantly uses...wonder how many of them will turn out to be pally pally with the next Jeffrey Epstein....

  7. Pascal Monett Silver badge

    "successful cryptocurrency adoption"

    Why the hell do we need that ?

    We have money already, thank you, we don't need a new scheme that only benefits criminals.

    They already know how to make money, stop making it easy for them.

  8. spireite Silver badge

    Who Wants To Be A Millionaire - Crypto Edition.......

    "I have 1000 pounds to spend/invest"

    "What 'vehicle' can I put it in where will do the least good?"

    A. Bank

    B. Bed

    C. Cryptocurrency

    D. Tramp

    "I don't need to a phone a friend, I know this one..... D"

    1. John Brown (no body) Silver badge

      A: Inflation higher than interest rates

      B: Inflation

      C: High chance of losing your shirt, small chance of actual profit.

      D: You get a warm fuzzy feeling and tramp might get their life sorted out. Depends how much you "invest" in the tramp and whether they want to do something about their situation.

      1. Disgusted Of Tunbridge Wells Silver badge

        C: It's only a grand. What's the worst case scenario? What's the best case scenario?

        D: Why not cut out the middle man and stick it straight up the tramp's arm yourself?

  9. yetanotheraoc Silver badge

    Where is the honor amongst thieves?

    I was trying to invest in a Ponzi scheme, and instead I was left holding the bag!

  10. Winkypop Silver badge

    Magic beans

    Get ya magic beans!

    Half price, worth millions!

    Magic beans!

  11. Anonymous Coward
    Anonymous Coward


    Don’t Steal^H^H^H^H^H Commit Fraud, the Government hates competition.

  12. Clausewitz 4.0

    Bad Bet

    People shouldn't bet expecting intelligent folks will sell or trade their assets for cookies.

    You cannot be sure of things even if you can read other people's minds, because they can hide what they want.

    Choose a good, stable trade platform and focus on cryptocurrencies already established in the market.

  13. Marty McFly Silver badge

    El Reg's formula for generating comments..

    Publish an article about cryptocurrency. Then watch the "I own some" crowd fight with the "I wish I bought some when it was cheap" crowd.

    For double the comment count, make the article say something good about cryptocurrency. That will really get the great unwashed masses excited.

  14. Ian Johnston Silver badge

    I love the idea of cryptocurrencies being abandoned or turned off. So much for all that "distributed ledger" and "free from control" crap.

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