On October 25, blockchain security auditor Hacken released its latest security insights report, with the objective of identifying trends in Q3 crypto hacks and evaluating the security approaches adopted by affected projects. The report specifically focused on rug pulls, which are exit scams characterized by a team artificially inflating their project’s token before abruptly withdrawing liquidity. Hacken found that rug pulls constituted the majority of exploits in the cryptocurrency market, accounting for over 65% of all hacks in Q3 2023.
The report highlighted the prevalence of rug pulls, attributing their abundance to the ease of creating such schemes. The report noted that serial scammers utilize token factories that exhibit identical behavior, enabling the production of fraudulent tokens on a large scale.
Despite their widespread occurrence, Hacken stated that preventing cryptocurrency rug pulls is relatively straightforward. To assess a project’s credibility, Hacken emphasized the importance of verifying independent third-party audits. Out of the 78 Q3 rug pulls analyzed by Hacken, only 12 reported having undergone any form of audit. However, Hacken cautioned users to exercise caution even when a crypto project provides an audit, as an audit alone does not always guarantee protection against scams. The report stated that users often overlook poor audit scores and consider the mere fact of an audit as sufficient.
According to Hacken co-founder and CEO Dyma Budorin, investors frequently ignore warning signs, such as the absence of audits, due to factors like the fear of missing out (FOMO). Budorin noted that the industry has witnessed success stories with memecoins like Pepe (PEPE) and Shiba Inu (SHIB), where a small investment led to substantial profits. This history prompts individuals to hope for a repeat, often causing them to disregard red flags and impulsively invest.
Budorin emphasized that scammers are adept at mimicking successful projects and frequently reference thriving ventures, intensifying FOMO around the next big opportunity. The CEO also highlighted that the process of investing in cryptocurrency is relatively simple, requiring only a few clicks, which can further contribute to impulsive decision-making.