25% of New Crypto Tokens in 2022 Fake: Chainalysis Report

• The Chainalysis report shows that nearly 25 percent of the digital tokens introduced in 2022 were scams.
• These are known as pump-and-dump schemes, which involves developers talking up a token to get investors interested and then selling it off for a profit.
• Pump-and-dump schemes have become very common in the crypto world and can hurt the reputation of cryptocurrency if people perceive it as rife with these kinds of scams.

Chainalysis Report

A new report issued by blockchain analysis firm Chainalysis has revealed that nearly 25 percent of digital tokens introduced in 2022 were scams designed to make off with investor funds. The document examines several tokens with signs of being pump-and-dump schemes and discusses how these scams have become increasingly common in the crypto world.

Pump and Dump Schemes

Pump and dump schemes involve developers or executives talking up a token to get investors interested, resulting in increased demand for the asset. As more investors pile into the token, its price rises to a top-of-the line level, at which point the developers sell off their holdings for a profit and exit the operation, leaving innocent traders with nothing but losses.

Impact on Crypto Reputation

Due to their ease of execution, pump and dump schemes can be detrimental to public perception of cryptocurrency as many people may view it as rife with malicious scams targeting newcomers. This could impede mass adoption if not properly addressed through greater regulation or education initiatives from industry leaders and innovators.

Chainalysis Statement

In response to its findings, Chainalysis released this statement: „Unfortunately, pump and dump schemes have also become common in the crypto world…many believe that cryptocurrency is approaching an inflection point that could spark mass adoption, but that could be difficult if the public perceives cryptocurrency as rife with pump and dump schemes designed to prey on newcomers.“

Taking Action Against Scams

It is important for industry players to take action against such fraudulent practices by increasing regulations or developing educational initiatives so people know what they’re getting into when investing in cryptocurrencies. It’s also essential for exchanges to implement KYC/AML measures so they can identify bad actors early on before they cause any further damage or losses within their platforms.