In the wake of recent hyperactive fluctuations, the market for cryptocurrency and non-fungible tokens is believed to have exploded to more than $3 trillion held by over 300 million people worldwide.
However, the current size of the market represents only a fraction of how much has been lost over recent years, according to at least one noted industry analyst. Recent findings suggest that “a whopping $25 trillion and counting has been lost to cryptocurrency and NFT rug pulls and scams to date,” according to a recent posting by Rebecca Moody, head of data research for Comparitech.
“As our cryptocurrency and NFT heist trackers have found, crypto is a lucrative business for hackers,” Moody pointed out. “These trackers don’t account for insider jobs and scams, such as Ponzi schemes, however.”
Hence, the researcher has created new tracking systems to count so-called “rug pulls” and scams, which are typically not included in this loss accounting.
Rug pulls incorporate losses within “both newly founded crypto tokens or NFTs, whereby the founders pull out before the project is fully built as well as exit scams from longer-running and more established projects,” according to Moody, who outlined her appraisal in a blog post earlier this month and updated it Aug. 24. The $25 trillion loss estimate also covers scams that are driven by Ponzi schemes, honeypots and posing as other types of digital currency.
But how could crypto losses have topped the gross domestic product value of many countries over the years without capturing as much attention, not to mention more intervention? Or, more accurately, why are losses so vastly underestimated according to Moody’s evaluation?
“From the research we’ve conducted, a lot of the scams for lower amounts or lesser-known tokens or NFTs go under the radar and aren’t heavily reported, if at all,” she pointed out in an interview. She added that some of these low-profile attacks “may only appear in tracking tools like those offered by PeckShield and Certik.”
Hence, Comparitech sought to collect information on as many of these seemingly low-value scams as possible “along with all of the well-known ones it’s given us a clearer picture of the true scale of the problem.” And yet, despite the unbelievably high toll of crypto losses to-date, Moody said that the estimate still might not be all-encompassing.
“It’s likely there are others that haven’t been reported on at all,” she pointed out.
“I think there is still a lot of confidence in crypto and NFTs as an investment, especially as it’s still a relatively new industry and as it has become far more ‘mainstream,’” she said in an interview. “There are also a lot of calls for greater regulation, which will add to confidence.”
And on the other end of the spectrum, a few recent individual heists are off-the-charts. Case in point: Nomad Bridge just recently was taken for more than $190 million in the third-biggest crypto heist of 2022 and the ninth-biggest of all time (so far). And losses are likely to increase as the embrace of digital currencies booms. Worldwide crypto adoption grew almost nine times over (880%) in 2021, according to Blockware Intelligence.
Below are the biggest crypto rug pulls and scams (based on the U.S. dollar amount stolen at the time of the attack) to date:
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