According to Hacken, cryptocurrency rug pull is among the easiest scams to prevent, the blockchain security auditor stated in a new report. In its recent reports, it mentioned that the majority of cryptocurrency scams usually share distinct and visible features which makes it easy enough for investors to spot.
Blockchain security auditor Hacken released its Q3 security insights report, analyzing trends in crypto hacks and evaluating affected projects’ security approach.
The report found that the majority of the projects lacked audits and a significant portion of the reported audits provided no did not provide any evidence. The report also specifically analyzed rug pull projects, it stated that crypto rug pulls accounted for more than 65% of all hacks in Q3 2023, becoming the largest amount of exploits in crypto.
The report noted that scammers make use of token factories that have a similar trend to create scam tokens on a large scale, and this is why many rug pull projects exist in the market because they’re easy to execute.
Hacken reiterated that cryptocurrency rug pulls are not difficult to prevent, despite their high prevalence. The cybersecurity firm provided some insights about such scams based on its Q3 observations.
Hacken emphasizes that independent audits by third parties are critical for assessing the credibility of crypto projects. Their study revealed that among the 78 rug pulls examined in Q3, only 12 reported having completed “any kind of audit.”
However, even projects with audits are not always safe, as some audits are not as rigorous or comprehensive as they should be therefore, users should always be vigilant and evaluate audits carefully, Hacken noted, stating:
“The project can undergo an audit and have an audit report, but with a poor score. Yet, users overlook this and consider the mere fact that the project was audited as sufficient.”
According to Hacken co-founder and CEO Dyma Budorin, investors often make decisions driven by factors like fear of missing out (FOMO) rather than careful assessment of risks. This is fueled by the success stories of some meme coins like Pepe and Shiba Inu, where small investments led to massive gains, so crypto users tend to hope for this history to repeat, the executive noted.
This desire for massive returns in a short period often allows users to enter a project without careful assessment of possible red flags. Scammers use this to manipulate investors, creating projects that mimic successful ones to make them appear legitimate. By intensifying the FOMO, scammers can convince individuals to make impulsive decisions and overlook red flags.
According to Budorin, investing in crypto is often a quick and straightforward process, with few barriers to entry. This can lead investors to make decisions based on impulse rather than careful consideration. Scammers know this and use it to their advantage, offering seemingly easy opportunities for making money.
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