New“Rug Pull” Concern In Cryptocurrency Markets

TURKEY – US-based payment services provider PayPal announced earlier this week that it has launched a USD-indexed stablecoin called PYUSD for payment and money transfer processes. Shares of PayPal, one of the first major fintech companies to adopt digital currencies, rose 2.66% last Monday with this decision. Crypto fraudsters, who wanted to turn this decision into an advantage, which excited crypto investors on the one hand and acted on the regulators on the other, did not stay idle. Gate.io Turkey Research Manager Sevcan Dedeoğlu warned the crypto ecosystem against fake cryptocurrencies produced by PYUSD.

66 fake cryptocurrencies were produced, reaching $3 million in volume

Cryptocurrency scammers took action after PayPal announced the launch of the dollar-based stablecoin PYUSD. DEXTools data showed that as of Tuesday, more than 66 fake cryptocurrencies have been produced on blockchain networks such as Ethereum, BNB Chain and Base. In transactions carried out on decentralized exchanges, the largest of these fake cryptocurrencies was found to have reached a transaction volume of about $ 3 million in a few hours.

Stating that it is possible to produce a new token at very low costs using a smart contract infrastructure, Sevcan Dedeoğlu said,“Decentralized exchanges allow a cryptocurrency to be produced, instantly liquidated and opened to transaction. Investors need to know that crypto scammers are behind this business. The scammers want to turn the initial excitement into an opportunity by quickly reacting to such big developments. A similar situation occurred in the Ripple decision, and company officials warned against fake gifts and campaigns. In these cryptocurrencies produced after the PayPal decision, it is possible to see a situation where the value of the cryptocurrency will be reset, which is called ‘rug pull’ and when the developers withdraw the liquidity at once.”

Regulatory debates will grow

Regulatory discussions on cryptocurrencies and dollar-indexed stablecoins flared up again after PayPal’s decision. US House of Representatives Congresswoman Maxine Waters noted that it is worrying that PayPal is offering its own cryptocurrency while there is still no legal framework for the regulation, oversight and enforcement of stablecoins. In the news on the subject, it was stated that names such as Senator Elizabeth Warren and Senator Sherrod Brown, who are known for their distance towards crypto, are afraid of the effects of a large-scale, dollar-indexed cryptocurrency on the US banking system in the event of a major crisis. Stating that the issue may attract the attention of regulators, especially the US central bank Fed and the US Securities and Exchange Commission SEC under the management of Gary Gensler, Sevcan Dedeoğlu said,“After the first comments, the markets are waiting for the next regulatory move. Previously, a similar initiative by Meta, called Libra, had quietly ended due to the impact of scandals such as Cambridge Analytica.”

“Stablecoins will be adopted more”

Noting that the acceleration of the Central Bank Digital Currency (CBDC) works by the central banks on the one hand and the increase in the steps of the financial technology institutions, on the other hand, strengthen the expectations regarding fixed coins. Gate.io Turkey Research Manager Sevcan Dedeoğlu concluded his evaluations with the following statements,“Some economies, especially those of the European Union, have prepared various policies on these issues. For example, EU regulations are expected to enter into force in June 2024. We can say that stablecoins, which accelerate money transfer, remittance, and international payments and whose value is determined directly by fiat currencies, will be adopted much more in the payment ecosystem in the coming years. As Gate.io Turkey, we continue to work at full speed to prepare millions of users for the changing paradigm of finance, and we continue to make reliable cryptocurrency trading and crypto investing accessible.

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