24% of cryptocurrencies created in 2022 ended up in scams

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A study carried out by Chainalysis indicates that in 2022 more than 1.1 million cryptocurrencies were created. Of these, only 40,521 traded for four consecutive days in their first week after their implementations, indicating that 24% of these cryptocurrencies are scams.

However, what is striking is that 1/4 of these surviving tokens look like scams. According to Chainalysis, 24% of these cryptocurrencies look like schemes of “pump & dump«.

That is, the developers of these cryptocurrencies attract new investors, causing their prices to inflate. Then, they dump their tokens on the market, putting an end to the hit-and-swindle.

Cryptocurrency scams of this type exceed the sum of COP $24 billion

Of the 44,521 projects that survived their first week, 9,902 of them would be scams. Although Chainalysis points out that some flaws can be natural, the security firm points out that most of them are mere scams.

To back this up, the company claims that 24% of these “pump & dump” schemes were created by 445 individuals or groups. That is, after making money with a cryptocurrency, scammers repeat the scam.

Would-be scammers even repeated the same scam more than 250 times. Source: Chainalysis.

In total, Chainalysis notes that victims invested (and therefore lost) $4.6 billion (COP $24 billion) in these 9,902 cryptocurrencies launched in 2022.

“A relatively trivial amount compared to the trillions in cryptocurrency transaction volume in 2022. “But it’s still a substantial amount of damage to unsuspecting investors,” Chainalysis notes.

Chainalysis highlights how these pump & dump occurs, all in less than a day.  Source: Chainalysis.Chainalysis highlights how these “pump & dump” hits happen, all in less than a day. Source: Chainalysis.

Finally, the company notes that it has analyzed tokens within the Ethereum and BNB ecosystems. Therefore, it is possible that this number is even higher if other networks are taken into account.

More than 1.1 million tokens launched in 2022 alone

While sites like CoinGecko and CoinMarketCap point to 12,000 to 24,500 cryptocurrencies on the market, data from Chainalysis points out that these numbers are almost 100 times higher.

In total, the Chainalysis study notes that more than 1.1 million tokens were created in 2022 alone. However, 96.3% of them were not even traded on the market.

“Although over 1.1 million tokens were released last year, the vast majority had virtually no traction, as measured by the frequency of trading that occurs on decentralized exchanges (DEXs).”

Therefore, this data shows how investors should be vigilant with new cryptocurrencies in the market, especially those that are traded on decentralized exchanges, which do not have any price filters.

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