TY - UNPB
T1 - Scam alert
T2 - Can cryptocurrency scams be detected early?
AU - Aliyev, Nihad
AU - Allahverdiyeva, Inji
AU - Putniņš, Tālis J.
PY - 2023
Y1 - 2023
N2 - Decentralized exchanges (DEXs) are gaining popularity, allowing investors to trade cryptocurrencies through liquidity pools. We find that about 44% of major DEX liquidity pools are scams, resulting in approximately $1.5 billion in investor losses. Scammers display specific traits, including limited token interactions, multiple pool creation, failure to lock liquidity provider tokens, mimicking other tokens, depositing a high percentage of token supply in pools, and launching liquidity pools soon after token release. Leveraging these attributes, we propose an index that can ex ante detect cryptocurrency scams, with potential applications in cryptocurrency surveillance.
AB - Decentralized exchanges (DEXs) are gaining popularity, allowing investors to trade cryptocurrencies through liquidity pools. We find that about 44% of major DEX liquidity pools are scams, resulting in approximately $1.5 billion in investor losses. Scammers display specific traits, including limited token interactions, multiple pool creation, failure to lock liquidity provider tokens, mimicking other tokens, depositing a high percentage of token supply in pools, and launching liquidity pools soon after token release. Leveraging these attributes, we propose an index that can ex ante detect cryptocurrency scams, with potential applications in cryptocurrency surveillance.
KW - Cryptocurrencies
KW - scams
KW - rug pulls
KW - hard rug pulls
KW - soft rug pulls
U2 - 10.2139/ssrn.4490180
DO - 10.2139/ssrn.4490180
M3 - Preprint
T3 - SSRN
BT - Scam alert
PB - SSRN
ER -