BNB Chain’s Rug Pulls: The Scams Keep Coming

The first quarter of 2023 really put BNB Chain in the spotlight, but not for any reasons that would earn it a gold star. According to a report from blockchain security firm Immunefi, a jaw-dropping 73.3% of all rug pulls in the crypto space occurred on this particular network. If you thought rug pulls were just a footnote in crypto history, think again!

The Stats: Numbers Don’t Lie

Immunefi’s report, aptly titled “Crypto Losses in Q1 2023”, surveyed a range of crimes in the crypto world and unearthed some truly staggering figures. When you combine the losses from both Ethereum and BNB Chain, they accounted for a whopping 68.8% of total losses due to hacks and scams. Within this duo, BNB Chain alone was responsible for 41.3% of those losses—talk about a royal headache!

What Exactly is a Rug Pull?

For those still scratching their heads, a rug pull occurs when developers—or as some might call them, smooth-talking scam artists—raise funds for a project and then vanish without a trace. Imagine pouring your heart and wallet into a new cryptocurrency only to find out it was all an elaborate game of pretend. That’s the essence of a rug pull.

Why So Many Scams?

So why is BNB Chain such a magnet for these scams? Adrian Hetman, Tech Lead at Immunefi, posits that it all boils down to the chain’s culture. He noted that there’s a tendency for developers to utilize forked code, which definitely creates a wild west atmosphere. In his words, “BNB Chain still has a serious issue with developers using forked code. Its community lacks a security-first approach and attracts many users looking for a quick way to earn money.” Might this be the craziest case of ‘easy come, easy go’ in modern finance?

The Silver Lining: Rug Pulls vs. Hacks

Despite the alarming numbers surrounding rug pulls, Immunefi reassured everyone that it’s not all doom and gloom in the crypto sphere. Hacks are still the big bad wolf, accounting for the majority of crypto losses in Q1 2023. According to the report, combined frauds—including rug pulls—represented only 4.3% of total losses! A bit of perspective goes a long way.

Notable Hacks: A Bloodbath of Crypto Losses

Speaking of losses, Q1 2023 didn’t skimp on blockbuster hacks that drained millions from DeFi protocols. Notable incidents included:

• BonqDAO: An oracle hack resulting in a $120 million loss on February 1.
• Dexible: A decentralized exchange aggregator that lost over $2 million on February 17.
• Euler: The largest DeFi attack of the quarter, where over $195 million went poof on March 13.

Looks like the hackers were very busy during those months!