Coinbase Chief Security Officer: scammers are "paying attention to crypto” right now

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Whether you like it or not, a lot of memecoins are scams

The crypto industry is riddled with scams, exploits and mistakes that can cost individuals and businesses tons of money. Especially when the market is up and AI is advancing, users can be at more risk.

“If you were to create a scammer index of bull versus bear market, it would currently be pointing more toward bull than bear,” Coinbase Chief Security Officer Philip Martin said on Talking Tokens. “We see the same thing, activity increases and decreases with the health of the state of the market overall.”

(Listen to the episode on Spotify, Apple or YouTube.)

Earlier this month, the FBI put out a Cryptocurrency Fraud Report that found Americans lost billions in crypto-related scams last year. Globally, in the past year over $1.6 billion was lost to DeFi scams, hacks and exploits and only $107 million of that amount was recovered, the De.Fi Rekt database showed.

“We currently see a lot of scammers paying attention to crypto,” Martin said.

Scams don’t have to derive from a shadowy character in the night, or someone exploiting a blockchain for hundreds of millions of dollars, but could also be found in a category that is extremely popular this market cycle: memecoins.

When asked if Martin viewed memecoins that are rug-pulls as a scam, he nodded.

They are a “confidence scam,” he added. “The person or people who are building a meme token and intend on rug-pulling it are trying to build confidence and create investment before they run away with the money.”

In general, there are hundreds of thousands of memecoins in circulation today. Majority last less than a day, if even a few hours. While there are some out there that have succeeded to gain market share, most don’t.

“I don’t see it any different than any other type of scam,” Martin said. “The mechanics are obviously different, but mechanics of scams change.”

Check out the next section for more details and the full episode.

The latest Talking Tokens podcast 🎙️

For this week’s Thursday episode, I sat down with Coinbase Chief Security Officer Philip Martin. 

We talk about security in crypto, the most common – and uncommon – scams and how to avoid them, what Coinbase is doing to stay safe and more. 

Talking Tokens episodes are released on Spotify and Apple Podcasts at 6AM EST or YouTube at 10AM EST every Tuesday and Thursday. Listen in!

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Monitoring blockchains

Looking at some of the biggest developments onchain.

• Sei blockchain passed $200 million in TVL

• LayerZero activity spikes 433% after its second airdrop announcement

• Tokenized RWAs are seeing the most protocols being built on Ethereum, Polygon, Avalanche and Injective, according to Coin98 Analytics (chart below)

Taking on the tokens 

The total crypto market cap is up about 1% in the past 24-hours to $2.26 trillion. It rose 4.1% over a 7-day period.

As for the largest cryptocurrencies by market cap…

These metrics were taken prior to publication on Thursday morning EST.

Money and people moves

Latest updates on crypto startups that secured funding and industry players who are starting something new.

1. ICYMI: Former Alameda Research CEO Caroline Ellison was sentenced to 2 years in prison

2. Initia raises $14 million in a Series A round to build its layer-1 network and “interwoven optimistic rollups”

3. A16z makes first 'DeSci' investment in decentralized biobank platform AminoChain (The Block)

Talking points for the road 

Here’s some headlines and topics that you can talk about at your next dinner party, crypto event or on a first date to look smart (results may vary.) 

1. PayPal to allow US business accounts to buy and transfer crypto (The Block)

2. Kamala Harris says she will support crypto: Here are 3 steps that would show she’s serious (Fortune)

3. Terraform Labs may close products, services in bankruptcy wind-down (Cointelegraph)

4. Stablecoins Will Drive Institutional Adoption in Asia: Chainalysis CEO (CoinDesk)

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Please note that this content is for informational and entertainment purposes only. Any views shared should not be considered financial advice, nor should it be used to make investment decisions. Cryptocurrencies are high risk and you should consult a financial professional before making any financial decisions. Make sure you do your own research. We may have a direct or indirect financial interest in content mentioned in this newsletter.