Cryptocurrency buzz drives record investment scam losses
ftc.gov
ftc.gov
Anyone who has spent significant time in certain corners of the internet has seen the high prevalence of get-rich-quick desperation in (some) cryptocurrencies. It repeats each cycle, but was at high intensity this year due to the low barrier to entry with BSC smart contracts. Anyone could create a PnD shitcoin.
All these scammers do is set up a nice looking website, fake some 'partnerships', then get influencers and spammers to put the word out. Once the scammers determine the market is at peak liquidity, they 'rug pull' by selling through all the liquidity, driving the price into the ground. Some rug pulls are instant, others are slow, to milk the buyers.
These scams are very common.. there are thousands of them. A lot of people willingly participate because it is possible to make some profit off suckers before the developers pull the rug. The profits are drying up as suckers are running out of money or are finally getting wise to the formula.
Despite how it sounds, I'm not in favor of regulation. I'm all for people learning lessons the hard way. I did at various times in my life and am better for it
Current favorite whipping targets are Safemoon and Doge.
I'm also a dog parent to a Shiba Inu so I feel like I must own some Doge, so I might be a bit biased.
It's likely that selling at .70 was the way to go (give those bags to someone else) however, could be a long time until it returns there.
The occasional blog post by long-time critics (Gerard et al) is the only thing of value you can find there.
I do know that being a big or famous name in tech made it very easy to capitalize on that name value by selling coins with your backing. Some of you are on this site reading this right now!
It ends up not mattering if the project is a complete dud. You become a multi-millionarie anyways. And it was all legal. But not a lot of value was produced.
Cryptocurrency is teaching a lot of people about finance, who wouldn't otherwise know nor be allowed to participate. I believe that is overall a net positive, even if some people lose money in the process.
If your neighbors pile their trash up on their lawn they might learn a lesson about rats the hard way, but the rats aren't going to stay put on their property.
While people are "learning their lesson" the number of scams are growing, the scams grow more sophisticated, the money the scammers earn gets funneled into other kinds of crime. I feel like there's a common but naive sentiment that you can take a "social Darwinism" approach to petty crime without the small fry growing until their activities start impacting you and your loved ones. Scamming is an ecosystem like any other and it will grow healthier and more robust if you let it flourish.
You could use your argument to justify government regulation for almost any decision that has consequences. This isn't 'social Darwinism', nor is it 'tough love'. It is about being able to make your own financial decisions without coercion and without obstruction
If people choose to enter into poor 'investments' in a hope to get-rich-quick, that is their decision and they can live with the consequences
But man the past few months, the doge coin mania has birthed an astonishing amount of scams, rugpulls and zero-utility coins. I really can’t defend crypto at this point at all.
Every bull market has brought the scams. This isn't just in crypto. How many penny stock scams were perpetrated during the dot com bubble by adding ".com" to the name of a company?
Scams are nothing new, scams in cryptocurrency are nothing new, and in all honesty 90% of them are obvious. General rule of thumb, if someone is telling you you can make money by spending some of your money right now, it is probably a scam, if they're saying you can make money by giving them some of your money then it is almost 100% certain to be a scam.
When tor was full of bitcoin doubler websites I tracked multiple hundred thousand dollars getting burned daily for months until it cooled down. This is like 6 years ago. I guess many back then learned their lesson, so do many others today. Or remember Mt gox? When like half of the active bitcoin market was suddenly lost?
I tend to disagree a bit. In the early days, most scams at least pretended to have some non-pump-and-dump usecase. Like Dentacoin or Filecoin. You could at least pretend to "buy filecoin today so you can store PB's worth of data in a year" or "buying Dentacoin now because in a year you need some dental work done".
Nowadays all new tokens/coins have 0 usecases attached and only exist to be pancake swapped and pumped and separating other people from their money. It's all about lending, yielding, farming, interest rates, staking, ...
Jumping about 3-4 years ago, just before NFTs became a thing and ETH transactions were still cheap there was a grace of the most simple, basic and stupid ponzi "games" the world has ever seen. "Buy color #24384, the next pays 150% of the price and you get 120% back" that often collapsed the same day, and as NFTs weren't a thing yet basically disappeared once the website went down. Yet people threw thousands of dollars at these games without asking questions.
Today's "bullshit" is much more sophisticated and usually doesn't collapse after only a few days, as well as is harder to see trough for naive investors.
But really I can't say it got worse, if anything these 'scams' have more winners because most 'investors' aren't that naive anymore.
The most traded coins right now according to CoinGecko are almost entirely memecoins with no utility whatsoever.
And if I’m honest, BTC was the original memecoin.
Seems like self regulation at its worst.
Bitcoin mining fit that model. It was making something in China and selling it outside China. Not only legal, but encouraged.
That just ended.
Increasing regulation and adopting that sort of paternalistic attitudes will do nothing except harbor further dissent and widen the divide between the rich and poor, as it always has.