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<\/p>\nCryptocurrency rug pulls are not too difficult to spot by investors, as the majority of such scams usually share distinct and visible features, according to a new report.<\/p>\n
Blockchain security auditor Hacken released its latest security insights report on Oct. 25, aiming to spot the trends in Q3 crypto hacks and evaluate how affected projects approached security.<\/p>\n
The report paid specific attention to rug pulls, which are a type of exit scam occurring when a team pumps their project\u2019s token before the sudden withdrawal of liquidity. According to Hacken, crypto rug pulls made up the largest amount of exploits in crypto, accounting for more than 65% of all hacks in Q3 2023.<\/p>\n
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The reason there are so many rug pulls on the market is that it\u2019s easy to create such schemes. \u201cSerial scammers use token factories that exhibit the same behavior to produce fraudulent tokens on a mass scale,\u201d the report notes.<\/p>\n
Despite their high prevalence, cryptocurrency rug pulls are \u201cone of the simplest scams to prevent,\u201d Hacken said, providing some tips about such scams based on its Q3 observations.<\/p>\n
One of the most crucial ways to assess a project is to check for an independent third-party audit, according to Hacken. Of the 78 Q3 rug pulls examined by Hacken, only 12 reported having completed \u201cany kind of audit.\u201d<\/p>\n
But even when a crypto project provides an audit, users should be vigilant to properly check them, as an audit alone doesn\u2019t always guarantee protection from scams, Hacken noted, stating:<\/p>\n
\u201cThe 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.\u201d<\/p><\/blockquote>\n
According to Hacken co-founder and CEO Dyma Budorin, investors often ignore red flags like the absence of audits and other issues due to factors like the fear of missing out (FOMO). The industry has seen success stories with memecoins such as Pepe (PEPE) and Shiba Inu (SHIB), where $100 out of curiosity led to significant profits, so people tend to hope for this history to repeat, the executive noted.<\/p>\n