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According to blockchain risk monitoring firm Solidus Labs, more than 350 fraudulent cryptocurrency tokens were created per day this year, defrauding millions of investors.

According to Solidus’ 2022 Rug Pull Report, 117,629 “fraud signs” were triggered from the beginning of the year to December 1. That’s a 41% increase from the nearly 83,400 fraud signs Solidus detected in 2021.

The report states that BNB Chain has the highest number of fraudulent tokens, with 12% of all BEP-20 tokens being fraudulent.

The Ethereum network was second, with an estimated 8% of ERC-20 tokens believed to be scams.

Solidus claims 2022 is the biggest year on record for fraudulent crypto tokens. Image: Solidus Labs

Carpet pulling is a type of crypto exit scam where an individual or team creates a token and raises its price before withdrawing the entire value of the project, leaving it as the token’s price goes to zero.

Almost 2 million investors have lost money to these scams since September 2020, which is more than the estimated 1.8 million combined creditors affected by the bankruptcies of crypto exchanges and credit platforms FTX, Celsius and Voyager.

The bankruptcies of FTX, Celsius, BlockFi and Voyager are estimated to affect more than 2.3 million users together. Image: Solidus Labs

The most popular type of fraud token was the “honeypot,” a tokenized smart contract that prevents buyers from reselling.

Solidus says the most successful “honeycomb” in 2022 was the $3.3 million Squid Game (SQUID) token scam, which rose 45,000% in a few days as investors bought into the hype, but failed to sell, ended by anonymous founders. discount with investor funds.

Centralized Exchanges (CEX) are also suffering from carpet pulling as many of these malicious tokens use them to fund their fraudulent project and cash out their ill-gotten gains.

Solidus claims that about $11 billion worth of Ether (ETH) stolen from fraudulent tokens has flowed through 153 CEXs since September 2020, with most of the exchanges being monitored by United States regulators.

Related to: 5 Key Highlights of Huobi 2022 Crypto Industry Report

Almost $4 billion flowed into US CEXs during the period analyzed, almost double that of the second most exposed CEX jurisdiction, the Bahamas.