According to research from trust-gauging organization published on March 2nd, scams averaged about $3,000 in losses for businesses and charities within Canada and the United States.
A report published by the Better Business Bureau (BBB) says that cryptocurrency-related scams are continually growing, becoming the second most risky of 2019 among North Americans.
The usual tactic, the study claims, is that of false promises of a «significant» return on investment in cryptocurrencies.
With such figures on the table, it represents a notable uptick since their 2018 report’s numbers, which put average losses at $900.
Trading in crypto exchanges with security breaches listed in the study
Following the same line, the BBB also lists as crypto scams losses from trading on exchanges vulnerable to hacker attacks.
The organization considers cryptocurrencies risky assets due to transactions that cannot be reversed in the event of theft or hacking.
The same report cites only one testimony from an Arizona resident about someone allegedly scammed by investing in cryptos. The BBB also specifies that most frauds in the field begin with email contact.
According to the BBB, a third of crypto scams involved the purchase of tokens, listing the cryptocurrency exchange company C2CX as responsible for one-third of the quoted losses (31%).
Employment-related scams as the riskiest in the ranking
Crypto-related scams are not the sole focus of the report. The BBB cited 9,050 instances of fraudulent online shopping sites. For comparison, the firm tallied only 273 cases of cryptos scams within the same year.
Another scam method is the fake employment offer, which is listed first in the BBB’s ranking, with the risk index showing a figure of 153.6, followed by crypto scams that have a 93.8 and online purchases with a slight margin of difference of 93.6.
DeFi Project Backed by Polychain and DragonFly Capital Shuts Down
Decentralized finance project Paradigm Labs — backed by veteran crypto investors Polychain Capital, Dragonfly Capital, and Chapter One Ventures — is shutting down.
In an announcement yesterday, March 10, CEO and co-founder Liam Kovatch said the closure was due to Paradigm’s “failure to carve a viable niche in the DEX decentralized exchange marketplace” and to factors both “within and outside” of the team’s control.
Out of step with a fast-evolving DeFi landscape
Founded in 2018, Paradigm Labs raised an undisclosed amount in seed funding for the development of a product dubbed Kosu — a liquidity aggregation protocol for DEXs.
In the span of these past two years, Kovatch wrote, the DEX landscape has “evolved considerably”, with the result that many of Paradigm’s early efforts and investment in Kosu were “made obsolete” by changes in DEX market structure:
“We’ve been able to observe significant developments such as the launch of Uniswap, the establishment of the decentralized finance (DeFi) movement and more. While exciting and positive for the community at large, these developments have made the DEX space incredibly fluid, and challenging for an organization like ours to navigate.”
Kovatch revealed that Paradigm Labs began to doubt Kosu’s viability in the rapidly changing DEX ecosystem by early to mid-2019, due not only to Uniswap’s popularity but also to early developments on the DEX protocol 0x (ZRX).
Amid an increasingly “crowded liquidity protocol/networking ecosystem”, Kovatch noted, the team designed a new product — a non-custodial request for quotation system dubbed Zaidan, built on 0x. This idea, however:
“Came to us late in the company’s life cycle at which point we were under-resourced to fully develop Zaidan … were quite hesitant to pivot completely away from Kosu due to the investment we had made in the project. In retrospect, this hesitation was a mistake. ”
Overall, Kovatch attributes Paradigm Labs’ failure to being “a bit too early” an entrant into the DeFi space, and the project has now found itself unable to secure the necessary funding to develop Zaidan into a live trading system.
Breaking down the acronyms
DEXs — or non-custodial, decentralized crypto exchanges — enable users to trade peer-to-peer, using smart contracts to automate deal matching and asset liquidation in order to allow users’ funds to remain under their control. Their sluggish adoption has to date broadly been attributed to their low liquidity rates relative to established centralized counterparts.
Meanwhile, DeFi is used to designate the decentralized finance market — or the use of blockchain, digital assets and smart contracts for financial services such as credit and lending.
DeFi in 2020
In early February, locked-up assets in the DeFi market — i.e. across its spectrum of smart contracts, protocols and decentralized applications — hit a milestone $1 billion in value. This represented a fourfold increase year-on-year.
Later that month, however, the sector saw a setback, falling by $140 million from its peak of $1.2 billion on Feb. 18. This followed a series of back-to-back “flash loan” attacks on the decentralized lending protocol bZx.
