Immunefi reports Q1 rug pulls on BNB Chain

According to a report published on April 4 by blockchain security firm Immunefi, over 73.3% of such scams in the entire crypto ecosystem occurred on the BNB Chain network in the first quarter of 2023.

The report, titled “Crypto Losses in Q1 2023,” investigated a variety of crypto hacks and scams that occurred during the first three months of the year. It was discovered that Ethereum and BNB Chain were the two largest targets for hackers and scammers, accounting for 68.8% of total losses. BNB Chain losses accounted for 41.3% of total hacking and scam losses.

On BNB Chain, one type of scam in particular reigned supreme: rug pulls, in which developers raise funds and then shut down without delivering a product or service. In the first quarter, 73.3% of all rug pulls in the crypto ecosystem occurred on the BNB Chain, according to Immunefi.

Immunefi technology leads Adrian Hetman to hypothesise that the high number of rug pulls on the chain may be the result of a culture that encourages forking open-source code:

“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. That’s why we continue to see the biggest number of exploits and rug pulls in this ecosystem.”

Despite the prevalence of these scams on the BNB Chain, Immunefi stated that rug pulls and other frauds pose a much smaller threat to the cryptocurrency community than hacks and exploits. According to the research, hacks were the “primary source” of losses in the first quarter of 2023, while other frauds combined (including rug pulls and other scams) accounted for just 4.3% of overall losses.

Millions of dollars were stolen from decentralised finance (DeFi) protocols in the first quarter of 2023 due to spectacular hacks and vulnerabilities. On February 1, the DeFi lending service BonqDAO lost $120 million in cryptocurrency due to an Oracle compromise.

The decentralised exchange aggregator Dexible was hacked for more than $2 million on February 17. And on March 13, Euler lost over $195 million in crypto during the quarter’s greatest DeFi incident.